Comrit Investments Offers $13.08 for Benefit Street Partners Realty Trust Shares
October 12, 2018 | James Sprow | Blue Vault
A limited partnership with a general partner of a limited liability company organized under the laws of the State of Israel has tendered for up to 1,800,000 shares of Benefit Street Partners Realty Trust for $13.08 per share in cash. The offer is currently set to expire on November 27, 2018.
On October 9, the Board of Directors of the REIT unanimously recommended that stockholders reject the tender offer. The Board gave a number of reasons in determining its recommendation:
• “The Board of Directors believes that the Offer Price represents an opportunistic attempt by the Bidder to purchase Shares at an unreasonably low price and make a profit and, as a result, deprive the Stockholders who tender Shares of the potential opportunity to realize the long-term value of their investment in the Company.”
• “The Company’s GAAP book value per Share as of June 30, 2018, is $18.95 which is 45% higher than the Offer Price. The Company’s most recent estimated net asset value per Share, which is as of September 30, 2017, was $19.02, which is also 45% higher than the Offer Price.”
• “By accepting the Offer Price, Stockholders would also be foregoing potential future distributions. The Company currently pays monthly distributions that, if annualized, amount to $1.44 per Share per year.”
• “The Bidder states that the Tender Offer is being made “for investment purposes and with the intention of making a profit from the ownership of the Shares” and admits that it was “motivated to establish the lowest price which might be acceptable” to the Stockholders. Therefore, the Bidder acknowledges that the Offer Price was established based on the Bidder’s objectives and not based on what is in the best financial interest of Stockholders. The Bidder also acknowledges that the Offer Price is not based on its assessment of the fair value of the Shares.”
• “Pursuant to the Company’s share repurchase program (“SRP”), which is subject to the restrictions set forth in the Company’s periodic reports filed with the SEC, in July 2018 the Company used available dividend reinvestment plan (“DRIP”) proceeds to repurchase approximately 368,000 Shares from Stockholders based on the Company’s then current book value per Share of $18.99. In January 2019, the Company expects to use available DRIP proceeds to repurchase Shares from Stockholders who wish to sell at the lesser of our GAAP book value or estimated net asset value per Share as of September 30, 2018. The Company has not, and does not in the future intend to, fulfill SRP repurchase requests in amounts that exceed available DRIP proceeds.”
According to Blue Vault’s Q2 2018 Nontraded REIT Industry Review, as of June 30, 2018, the Company’s portfolio consisted of 94 loans. The commercial loans held for investment had a total carrying value, net of allowance for loan losses, of $1,907.7 million. As of June 30, 2018, the Company’s total commercial loans, held-for-sale, measured at fair value comprised of 10 loans with a carrying value of $102.3 million. The Company had a debt ratio of 69.3% with all debt at variable rates averaging 5.30%. However, as a debt REIT that matches the maturities and variable rates of its borrowings with the maturities and variable rates of its debt assets, the REIT is protected from interest rate risk and refinancing risk. The REIT has made total cash distributions, excluding DRIP proceeds, equal to 104% of MFFO since inception and 87% over the last 12 months.
The REIT raised $796.4 million in its offering, including DRIP proceeds, which closed in January 2016. Shares were originally issued at $25.00.
The Company distributed $22.8 million during the six months ended June 30, 2018, comprised of $15.7 million in cash and $7.1 million in shares of common stock issued under the DRIP. For the first half of 2018, cash flow from operating activities was negative $49.9 million.
Sources: SEC, Blue Vault
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