It is a nontraded-REIT war, with a leading sponsor of nontraded real estate investment trusts making a hostile-takeover bid for a health care REIT that is in the middle of a management shake-up.
Grubb & Ellis Healthcare REIT II said in a regulatory filing last week that it had rejected an unsolicited, conditional offer from American Realty Capital Healthcare Trust Inc. to buy all of the REIT's outstanding shares at $9.01 a share. The Grubb & Ellis REIT is raising money from investors at $10 a share.
The unsolicited offer by American Realty, made Dec. 1, is thought to be the first such hostile-takeover bid in the industry, which is on pace to raise $9 billion from investors this year.
The surprising move comes just weeks after a big shake-up at the Grubb & Ellis REIT. As InvestmentNews reported last month, Healthcare REIT II's board said that it was changing sponsors, essentially dumping Grubb & Ellis and replacing it with Griffin Capital Securities Inc. and the newly formed American Healthcare Investors LLC.
The top executives at American Healthcare are quite familiar with the Grubb & Ellis health care REIT.
Jeff Hanson, American Healthcare's CEO, is the former chairman and chief executive of the Healthcare REIT II, while Danny Prosky was executive vice president of health care real estate with Grubb & Ellis.In fact, the duo left Grubb & Ellis and formed American Healthcare Investors in part to run Healthcare REIT II.
Now Mr. Hanson and Mr. Prosky face a hostile takeover.
American Realty Capital's chief executive, Nicholas Schorsch, said that his firm's bid for the Grubb & Ellis offering is about two-thirds in cash and one-third in stock
“We think of ourselves as a white knight for the investor in this situation,” he said. “We were shocked that they said no.”
Mr. Hanson has a different take.
“We're not for sale,” he said. “We're one of the best nontraded REITs in the industry” from an operations and investing standpoint.
Mr. Hanson added: “The roll-up proposal is a head scratcher. We're both raising equity through similar channels — the same broker-dealers and advisers.”
Griffin Capital is the broker-dealer for the REIT.
Mr. Hanson said that the Grubb & Ellis health care property trust is within weeks of closing on major real estate properties worth $278 million.
The Grubb & Ellis Healthcare REIT is substantially bigger than the American Realty Healthcare Trust. American Realty Capital Healthcare's portfolio last month was $129.2 million, while the Grubb & Ellis Healthcare REIT has acquired more than $430 million of health-care-related assets, according to SEC filings.
The Grubb & Ellis REIT was the eighth-largest fundraiser in the industry, gathering $244.6 million in the first three quarters this year, according to MTS Research Advisors.
Mr. Schorsch declined to say what steps American Realty could take to acquire the Grubb & Ellis REIT.
bkelly@investmentnews.com
