2 REITs Explore Their Strategic Alternatives
They are CNL Healthcare Properties II and Columbia Property Trust.
Two separate REITs are exploring strategic alternatives for two entirely separate reasons — both of which are indicative of larger trends in the industry.
One is CNL Healthcare Properties II, which cited “a challenged environment for broker-dealers and non-traded REIT formats,” as it announced that its board of directors has decided not to pursue a follow-on offering and to close the current equity offering effective Oct. 1, 2018. Instead it is now exploring a sale.
The other REIT is Columbia Property Trust and according to accounts in Bloomberg and The Wall Street Journal, it has been approached by a buyer.
Their respective stories are flip sides of the larger trends in the industry, including the disconnect in asset prices between the public and private markets.
Orlando, FL-based CNL Healthcare Properties II, a non-traded real estate investment trust that focuses on seniors housing and healthcare properties, announced that it has also formed a special committee to explore of potential strategic alternatives for the REIT. These may include the sale of the company to shareholders or a merger or other transaction with a third party or parties.
“Based on our current and projected equity capital raise prospects along with a challenged environment for broker-dealers and non-traded REIT formats, we as a board unanimously concluded that identifying and pursuing opportunities to maximize value in the nearer term is in the best interest of the company and our shareholders,” said Stephen H. Mauldin, president and CEO of CNL Healthcare Properties II.
Since its launch in mid-2016, CNL Healthcare Properties II has invested in approximately $60 million of healthcare real estate assets, including two recently built, private pay seniors housing communities in Florida markets and one fully occupied, system affiliated, on-campus medical office building in the Overland Park, KS submarket.
Earlier this summer Columbia Property Trust received a bid and has since invited other companies to participate in a sales process. It is unclear whether there will even be a sale — one of the sources cited by the Wall Street Journal said it was unlikely. Nevertheless the Atlanta-based office REIT has tapped an advisor to guide it in the process.