Steadfast Income REIT Remains Neutral on Third Party Tender Offer
January 2, 2019 | James Sprow | Blue Vault
In a January 2, 2019, letter to shareholders, Steadfast Income REIT’s board of directors remained neutral and made no recommendation whether shareholders should accept or decline Liquidity Partners Trust I’s unsolicited tender offer to purchase up to an aggregate of 100,000 shares of the REIT’s common stock at a price of $5.73 per share.
In determining that the Company will remain neutral and make no recommendation whether stockholders should accept or decline the Liquidity Partners Offer, the board considered, among other things, the following:
|(i)||On May 9, 2018, the board determined an updated estimated value per share of the Company’s common stock of $9.84, which represents the Estimated Value, less the special distribution of $1.00 per Share that was paid to stockholders of record as of the close of business on April 20, 2018 (the “Updated Estimated Value”). The Updated Estimated Value is $4.11 higher than the Offer Price on a per Share basis.|
|(ii)||Stockholders who tender their Shares will assign their right to receive distributions that are paid after January 25, 2019 (or such other date to which the Liquidity Partners Offer may be extended).|
|(iii)||The Liquidity Partners Offer provides a means for stockholders to obtain liquidity with respect to their Shares, albeit at a lower price than the Updated Estimated Value or what the board believes to be the Shares’ long term value.|
|(iv)||The Company currently offers stockholders liquidity through its share repurchase program (the “SRP”). The SRP may provide stockholders the opportunity to have their Shares repurchased by the Company, subject to certain restrictions and limitations. The purchase price for Shares repurchased under the SRP is equal to 93% of the most recent estimated net asset value per Share of the Company’s common stock, as determined by the board, which may be further reduced based on how long a stockholder has held its Shares. However, stockholders may not be able to have their Shares repurchased under the SRP due to the limitations of the SRP, including the annual limitation on the number of Shares repurchased under the SRP during any calendar year to 5% of the weighted average number of Shares of the Company’s common stock outstanding during the prior calendar year, and a $2,000,000 limit on the amount of Shares that may be repurchased during any quarter pursuant to the SRP.|
|(v)||The board has the right to amend, suspend or terminate the SRP at any time upon 30 days’ notice to the Company’s stockholders so as to preclude repurchases by the Company, and the board makes no assurances with respect to the timing of a liquidity event for stockholders. Further, because the Shares are not listed on any national securities exchange, there is a limited market for the Shares.|
In summary, the board takes no position and remains neutral regarding whether the Company’s stockholders should accept or reject the Liquidity Partners Offer. Each stockholder must independently evaluate whether to tender its Shares to Liquidity Partners pursuant to the Liquidity Partners Offer.
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