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Articles Tagged with AFIN

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Money MazeEarlier this month, a tender offer to purchase shares of Carey Watermark Investors Inc. (“Carey Watermark”), a publicly registered non-traded real estate investment trust managed by W.P. Carey Inc. (NYSE: WPC), was reportedly completed by a private investor known as Everest REIT Investors I LLC (“Everest”).

According to public SEC filings, the unsolicited offer to purchase up to 7.02 million shares of common stock, or roughly 5 percent of the outstanding shares of Carey Watermark, resulted in Everest’s  purchase of 48,831 shares for $7.50 each in its tender offer that expired on March 29, 2019.

Carey Watermark shares originally sold for $10.00 each and have an estimated net asset value  (NAV) of $10.41 as of December 31, 2017.

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The share price of American Finance Trust (“AFIN”), a REIT that published an estimated net asset value (NAV) of $23.56 a share before listing its shares on the Nasdaq Global Select Market (“Nasdaq”) in the summer of 2018, has continued to languish, reaching a market price as low as $10.08 in trading on April 12, 2019.

money whirlpool
As previously reported, on June 29, 2018, the board of directors of AFIN, formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq, and listed its shares effective July 19, 2018. Although most investors paid $25.00 a share for AFIN shares in the Company’s offerings, AFIN shares have consistently traded well below that price level since the Nasdaq listing.

Last year, a third party known as MacKenzie Realty Capital Inc. made two unsolicited tender offers to purchase AFIN shares for as much as $15.00 per Class A share- offers that AFIN’s board recommended shareholders reject.

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Money Whirlpool
As discussed in a prior blog post, on June 29, 2018, the board of directors of American Finance Trust, Inc. (“AFIN” or the “Company”), formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq Global Select Market (“NasdaqGS”), under the symbol ‘AFIN’.  Pursuant to that plan, half of AFIN’s shares — AFIN Class A shares — were recently listed on NasdaqGS.  Specifically, since July 16, 2018, shares of AFIN have been publicly traded and are currently priced around $17.50 per share.  Therefore, investors who participated in the IPO and paid $25 per AFIN share and continue to hold their position have incurred substantial unrealized losses on their investment of approximately 30% (exclusive of commissions, as well as distributions paid, to date).

Most recently, the AFIN board of directors announced that in connection with their public listing, the former non-traded REIT now intends to convert its Class B-1 shares, which represent approximately 25% of AFIN shares outstanding, into Class A shares one week earlier than previously planned, on October 10, 2018.  At this time, Class B-2 shares are still scheduled to convert to AFIN Class A shares on January 15, 2019, as previously planned.

AFIN shareholders have expressed concern that the Company’s plan to list its shares on NasdaqGS in such an incremental, phased manner will likely serve to dilute the value of the AFIN Class A shares, thus creating downward selling pressure on a stock that has already suffered considerable decline from its IPO pricing.  In addition, some shareholders have expressed concern over the fact that AFIN recently cut its dividend from approximately $1.30 to $1.10, effective July 1, 2018.  This amounts to a reduction in distribution of approximately 15% and is of particular concern to the many retail investors who initially purchased AFIN shares for their income component.

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stock market chartAs previously reported, on June 29, 2018, the board of directors of American Finance Trust, Inc. (“AFIN” or the “Company”), formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq Global Select Market (“Nasdaq”), under the symbol ‘AFIN’.  The company listed its shares effective July 19, 2018.  Although most investors paid $25.00 a share for AFIN shares in the Company’s offerings, AFIN shares have consistently traded well below that price level since the Nasdaq listing.  AFIN shares have traded as low as $13.15 a share, and closed on July 30, 2018 at $14.93 a share.

As of July 26, 2018, an investor known as MacKenzie Realty Capital, Inc. has now announced a tender offer for shares of AFIN, offering $15.00 per Class A Share (AFIN), $11.27 per Class B-1 Share, and $10.00 per Class B-2 Share.  The performance of the Company since it started trading on July 19 and the relatively low tender offer price may have caught some investors by surprise, since AFIN published an estimated net asset value of $23.56 in June 2018.

Because AFIN was registered with the SEC, the non-traded REIT was permitted to sell securities to the investing public at large, including numerous unsophisticated investors who bought shares through the initial public offering (“IPO”) upon the recommendation of a broker or money manager.  AFIN commenced its initial public offering in April 2013, which closed approximately six months later, raising $1.6 billion in investor equity.  Investors who participated in the IPO paid $25 per share.  AFIN later merged with another REIT known as American Realty Capital Retail Centers of America in a controversial 2017 transaction.

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money whirlpoolAmerican Finance Trust, Inc. (“AFIN” or the “Company”) listed its shares on Nasdaq Global Select Market (“Nasdaq”) on July 19, 2018, with trading opening at $13.15 a share with.   AFIN sold shares to public at $25.00 a share,.  While the trading price of AFIN may fluctuate, it appears that pre-listing investors in the REIT have likely suffered substantial principal losses.

On June 29, 2018, the board of directors of AFIN, formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq under the symbol ‘AFIN’.  In order to effectuate the Nasdaq listing and account for possible downward selling pressure upon listing, AFIN’s board also approved a phased liquidity plan, which includes the following important components through filing amendments to the Company’s charter:

  • 2-to-1 reverse stock split: pursuant to this reverse split, every two shares of AFIN (par value $0.01) are to be converted into one share of common stock (par value $0.02);