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Carey Watermark Board Urges Rejection of Everest REIT Tender Offer

February 22, 2019

Carey Watermark Board Urges Rejection of Everest REIT Tender Offer

February 22, 2019 | James Sprow | Blue Vault

The board of Carey Watermark Investors Inc. is urging stockholders to reject a $7.50-per-share cash tender offer that Everest REIT Investors I LLC has recently launched.

Aside from how the offer price is "significantly less" than the current and potential long-term value of the company, the board said the offer is not guaranteed to be completed, may be amended to decrease the offer price and is an opportunistic attempt by Everest REIT to profit by buying the shares at a low price.

Everest REIT is offering to buy up to 7,020,000 common shares of Carey Watermark.

Related: MacKenzie Capital Launches $11.39 Tender Offer for Inland Residential Shares

On April 11, 2018, Carey Watermark Investors announced that its NAV per share as of December 31, 2017, was $10.41. The offer price by Everest REIT Investors is approximately 28% lower than the December 31, 2017, NAV. Carey Watermark Investors maintains a quarterly redemption program. Except for redemptions sought in certain defined special circumstances, the redemption price is 95% of the company’s most recently published NAV, which is currently $10.41 per share.

During the nine months ended September 30, 2018, the nontraded REIT redeemed 2,874,936 shares of its common stock pursuant to its redemption plan (representing 713 requests), at an average price per share of $9.90. As of September 30, 2018, it had fulfilled all the valid redemption requests received during the nine months ended September 30, 2018. It funded all share redemptions during the period with proceeds from the sale of shares of common stock pursuant to the DRIP.

CTT Auctions currently has no biddable listings for Carey Watermark Investor shares, but the most recently auctioned lot of 6,148 shares was sold for $9.22 per share in November 2018.

Sources:  SEC, cttauctions.com

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