New York-based Healthcare Trust, Inc. (HTI), a publicly registered, non-traded real estate investment trust formerly operating as American Realty Capital Healthcare Trust II, Inc. (ARC HT II), said it has initiated a strategic review process “to identify, examine, and consider a range of strategic alternatives.” The REIT focuses primarily on healthcare-related assets including medical office buildings (MOBs), seniors housing, and other healthcare-related facilities.
The company is in the process of engaging a leading real estate investment banking group as financial advisor, and has retained Gibson, Dunn & Crutcher LLP as special legal counsel in connection with the strategic review process.
The move comes in the midst of a crowded field of REITs being put up for sale and exploring strategic options, including American Farmland Company (NYSE MKT: AFCO), AdCare Health Systems Inc. (NYSE MKT: ADK), KBS Legacy Partners Apartment REIT (non-traded), KBS Strategic Opportunity REIT (non-traded), Stratus Properties Inc. (NASDAQ: STRS), and InvenTrust Properties Corp. (non-traded, formerly Inland American), which announced the spin-off of its Highlands REIT Inc. two weeks ago.
“The steps we are taking represent our commitment to maximize value to our shareholders over the long term,” said the company’s chairman Randolph Read.
ARC HT II had completed a $2.1 billion non-listed public offering as of November 17, 2014, at an initial price per share of $25.00. On March 18, 2015 ARC HT II announced its intention to list its common stock on a national stock exchange under the symbol “HTI” with the assistance of its financial advisors, KeyBanc Capital Markets and RCS Capital, the investment banking and capital markets division of Realty Capital Securities, LLC. However, the listing failed to materialize.
As of December 31, 2015, HIT owned an investment portfolio of 166 properties with 8.5 million sq. ft., consisting of 81 MOBs with a 91% occupancy rate, 58 senior housing properties, 20 post-acute care properties, 4 hospitals, 2 development properties and land, “with an aggregate gross asset value of $2.3 billion,” according to the company.
As of Q4 2015, HIT listed total assets of $2.27 billion on its books. Based on its total number of 86.68 million shares outstanding as of February 29, 2016, Healthcare Trust’s latest net asset value per share of $22.27 would imply a total net asset value of $1.93 billion.
HTI is advised, and directly or indirectly owned and controlled by AR Capital LLC, AR Global, Healthcare Trust Advisors LLC, and AR Global Investments LLC.
New York-based powerhouse AR Capital, formerly operating as American Realty Capital, was co-founded in 2006 by Nicholas S. Schorsch and William M. Kahane. AR Global Investments LLC operates as a subsidiary of AR Capital LLC, a full service investment management firm providing advisory services to retail and institutional investors.
AR Capital’s AR Global is one of the largest alternative asset managers in the world, with over $18 billion of real estate and loans under management. AR Global’s investment programs include net leased properties in the U.S. and Europe, and domestic strategies focused on healthcare real estate, hotels, retail shopping centers, and New York City office buildings, as well as both real estate loans and corporate credit.
On November 9, 2015, private equity giant Apollo Global Management, LLC (NYSE: APO) and AR Capital, LLC announced that they have mutually agreed to terminate a planned transaction pursuant to which Apollo would have purchased for $378 million a controlling interest in newly formed AR Global Investments LLC, owning a majority of AR Capital’s asset management business.
A week later, on November 16, 2015, AR Capital announced the suspension and acceptance of new subscriptions to certain of its current investment programs effective December 31, 2015, “as a result of regulatory and market uncertainty.”
“Until there is greater clarity, we have decided to sit this one out,” said Kahane at the time, adding, “we do not intend to register any new product offerings nor pursue any of our existing offerings after December 31, 2015. Naturally, as the government’s position becomes clearer, we may reconsider our present posture on these issues.”
AR Capital’s decision came within days after the state of Massachusetts charged Realty Capital Securities (RCS) with fraudulently securing proxy votes to support real estate deals sponsored by AR Capital, which is owned by Schorsch and Kahane.
Photo: Nicholas “Nick” Schorsch, Chairman, CEO and Co-Founder of AR Capital, formerly American Realty Capital.