Sentio Healthcare Properties Urges Shareholders to Reject Third-Party Tender Offer

March 7, 2017


Sentio Healthcare Properties Urges Shareholders to Reject Third-Party Tender Offer

March 7, 2017 | by James Sprow | Blue Vault 

Holding Tablet PC

In a press release dated March 6, the CEO of Sentio Healthcare Properties urged its shareholders to reject a tender offer by MacKenzie Realty Capital, Inc. offering to pay $7.25 per share for the common stock of the Company. Following are quotes from the letter to shareholders from CEO John Mark Ramsey:

“Dear Stockholder:

You may soon receive correspondence from MacKenzie Realty Capital, Inc. (the “Bidder”) relating to a tender offer to purchase your shares of Sentio Healthcare Properties, Inc. (the “REIT”). The Bidder has informed us that its offer price will be $7.25 per share. We believe the Bidder’s offer price is significantly less than the current and potential value of your shares and recommend against selling shares at that price.

To decline the Bidder’s tender offer, simply ignore it. You do not need to respond to anything. In arriving at our recommendation against selling your shares to the Bidder, we considered the following:

On March 23, 2016, our board of directors approved an estimated per-share value of the REIT’s common stock of $12.45 per share, derived from the estimated value of the REIT’s assets less the estimated value of the REIT’s liabilities, divided by the number of shares outstanding, calculated as of December 31, 20151. This estimate is $5.20 per share above the Bidder’s offer price of $7.25. The REIT periodically updates its estimated per-share value. Based on the deep knowledge and familiarity the REIT’s external advisor has with the REIT’s portfolio of properties, the board of directors believes that the March 2016 estimated per-share value has not been adversely affected since March 23, 2016.

We believe that the Bidder’s offer is meant to take advantage of the illiquidity of the REIT’s shares by buying your shares at a price significantly below the estimated per-share value in order to make a significant profit.

Please be aware that once you agree to sell your shares to the Bidder, even if the offer remains open, you may not change your mind and withdraw the assignment of your shares to the Bidder. Also, the Bidder is in no way affiliated with the REIT or Sentio Investments, LLC. Finally, please note that the Bidder does not have a copy of our stockholder list. The Bidder’s mailing will be conducted by a third party, which has agreed to keep the list of our stockholders confidential.”

As reported in the Blue Vault Partners Q3 2016 Nontraded REIT Industry Review, Sentio Healthcare Properties was fully funding its distributions from cash flows from operations and had YTD FFO and MFFO payout ratios of 35% and 34% respectively. The current distribution yield was 5.00% based upon the original $10.00 per share offering price. The REIT owned or had joint venture interests in 34 properties as of September 30, 2016.

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Gil Armour, CFP
February 3, 2016

I have been using Blue Vault Partners for the past five years.  I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs.  The reports help me analyze which sponsors are doing a responsible job of managing their offerings.  This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.