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Steadfast Proposes Merger of Three Nontraded REITs

August 7, 2019

Steadfast Proposes Merger of Three Nontraded REITs

August 7, 2019 | James Sprow | Blue Vault 

On August 5, 2019, Steadfast Income REIT, Inc. and Steadfast Apartment REIT, Inc. entered into an Agreement and Plan of Merger. Subject to the terms and conditions of the merger agreement, Steadfast Income REIT will merge with and into a wholly-owned subsidiary of Steadfast Apartment REIT.

At the effective time of the merger and subject to the terms and conditions of the merger agreement, each issued and outstanding share of Steadfast Income REIT common stock will be converted into the right to receive 0.5934 shares of Steadfast Apartment REIT’s common stock.

Steadfast Income REIT may initiate, solicit, provide information and enter into discussions concerning proposals related to alternative business transactions, during a “go-shop” period to end on September 5, 2019. 

The merger agreement also provides that prior to the shareholders of Steadfast Income REIT approving the merger, the board of directors of Steadfast Income REIT may withdraw its recommendation of the merger or make an Adverse Recommendation Change (as defined in the merger agreement), subject to complying with certain conditions set forth in the agreement.

There are termination fees in the merger agreement if Steadfast Income REIT accepts a superior proposal or makes an Adverse Recommendation Change, depending on when those might occur.

On August 5, 2019, Steadfast Apartment REIT also entered into an Agreement and Plan of Merger to acquire Steadfast Apartment REIT III, Inc. Subject to the terms and conditions of the merger agreement, Steadfast Apartment REIT III will merge with and into a wholly-owned subsidiary of Steadfast Apartment REIT.

At the effective time of the merger and subject to the terms and conditions of the merger agreement, each issued and outstanding share of Steadfast Apartment REIT III common stock will be converted into the right to receive 1.430 shares of Steadfast Apartment REIT’s common stock.

The same “go-shop” provisions apply to the Steadfast Apartment REIT III merger plan, with a deadline of September 19, 2019, and there are termination fees in the merger agreement if the REIT accepts a superior proposal or makes an Adverse Recommendation Change.

If the mergers of Steadfast Income REIT and Steadfast Apartment REIT III into Steadfast Apartment REIT are consummated, the combined company after the mergers will retain the name “Steadfast Apartment REIT, Inc.” The merger of Steadfast Income REIT and Steadfast Apartment REIT III with Steadfast Apartment REIT are not contingent upon each other. 

If the mergers were to occur today, the combined company’s portfolio would consist of 71 properties in 14 states with an average effective rent of $1,158. Based on occupancy as of June 30, 2019, the combined company’s portfolio is expected to have an occupancy rate of 94%, an average age of 20 years and gross real estate assets of $3.3 billion.

On August 6, 2019, Steadfast posted to its website (http://www.steadfastreits.com) a presentation prepared by the company, Steadfast Apartment REIT and Steadfast Income REIT containing certain information related to the proposed mergers.

The merger transactions are expected to close in the first quarter of 2020, subject to the approval by Steadfast Income REIT and Steadfast Apartment REIT III stockholders. 

Source:  SEC, Steadfast

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