Grubb & Ellis REIT Files $3.3B Offering

The 330 million shares of stock would include up to 300 million shares in a primary offering and 30 million shares in a proposed distribution reinvestment plan. The primary offering is priced at $10 per share and the distribution reinvestment plan at $9.50 per share.

Nontraded REITs typically expect investors to hold their shares until a date when the REIT will either list the shares on an exchange of liquidate and distribute the proceeds of the liquidation. In the case of Grubb & Ellis Healthcare REIT II, its SEC filing says that the REIT intends to "effect a liquidity event within five years after the completion of our offering stage." The offering stage will continue to the earlier of 2011 or a time when the maximum amount of stock has been sold, which the REIT estimates at two years from the date of the initial offering, although it may extend the offering for an additional year.

The REIT's offering prospectus points out that the market for medical office buildings and healthcare-related facilities in the US continues to expand as demand for healthcare grows and the population ages. It cites US Department of Health and Human Services figures showing that national healthcare expenditures rose from 15.8% to 16.6% of the US gross domestic product between 2003 and 2008 and are projected to reach 20.3% by 2018. In 2008, healthcare expenditures reached approximately $2.4 trillion and are expected to grow at a relatively stable rate of approximately 6.2% per year to reach $4.4 trillion by 2018, the prospectus point out.

Grubb & Ellis Healthcare REIT II's predecessor, Grubb & Ellis Healthcare REIT Inc., has acquired 43 properties throughout the US for an aggregate of more than $1 billion. Among its recent acquisitions was a four-building medical office portfolio in Wisconsin that it bought for $34 million from Aurora Healthcare.