TAMPA, FL—Carter Validus Mission Critical REIT and Carter Validus Mission Critical REIT II have entered into a definitive agreement to merge in a stock and cash transaction. The entity they will create will be valued at $3.2 billion.

The two portfolios are complimentary, according to Michael A. Seton, CEO and president of the two REITs, and joining them together will create significant advantages for stockholders of both companies, he says. “We expect that the combined company will benefit from increased size and scale, further diversification of tenancy and geography, and the continued guidance of its seasoned management team, culminating in expanded potential liquidity options and resulting value to stockholders,” he says.

This deal follows another recent smaller-sized REIT merger — the combination of Cousins Properties and TIER REIT.

Speaking generally, Scott Robinson, director of the New York University's Schack Institute of Real Estate's REIT center and a clinical assistant professor who focuses on finance and investment, says such transactions could be a trend this year.

There won't be the large private takedowns of public REITs that we saw last year, he predicted. Rather, M&A activity will be driven by REITs that are looking for more tactical plays, such as wanting to bolster their exposure to different markets, add new concentrations or just increase scale to improve their access to liquidity, he tells GlobeSt.com.

Under the terms of the merger agreement, Carter Validus Mission Critical REIT (CVMC REIT I) stockholders will receive $1 per share in cash and .4681 shares of Carter Validus Mission Critical REIT II (CVMC REIT II) Class A common stock for each share of common stock they own.

When the merger closes, current CVMC REIT I stockholders will own approximately 39% and current CVMC REIT II stockholders will own approximately 61% of the combined company, on a fully diluted basis.

The transaction is expected to close in the second half of 2019, subject to certain closing conditions, including the approval of the merger by CVMC REIT I stockholders.

The merger agreement includes a “go-shop” provision that allows the special committee of the board of directors of CVMC REIT I to solicit and negotiate with other potential acquirers to determine whether they are interested in making a proposal to acquire all or part of CVMC REIT I. CVMC REIT I will solicit competing acquisition proposals through May 26, 2019.

Instant Insights /

Carter Validus REITs to Merge in $3.2B Deal

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