Hostile Bid for Grubb Health Care From.....

Post Reply
Posts: 595
Joined: Mon Feb 28, 2011 8:21 pm

Hostile Bid for Grubb Health Care From.....

Post by GeorgiaGulf » Tue Dec 06, 2011 2:39 pm

Popular property trust receives first-ever hostile bid for nontraded REIT

Weeks after management shake-up, Grubb & Ellis Healthcare REIT II gets unsolicited bid; 'We're not for sale'

By Bruce Kelly

December 6, 2011
It's a nontraded-REIT war, with a leading sponsor of nontraded real estate investment trusts making a hostile-takeover bid for a health care REIT that is in the middle of a management shake-up.

Grubb & Ellis Healthcare REIT II said in a regulatory filing today that it has rejected an unsolicited, conditional offer from American Realty Capital Healthcare Trust Inc. to buy all of the REIT's outstanding shares at $9.01 per share. The Grubb & Ellis REIT is currently raising money from investors at $10 per share.

The unsolicited offer by American Realty, made Dec. 1, is believed to be the first such hostile-takeover bid in the industry, which is on pace to raise $9 billion from investors this year.

The surprising move comes just weeks after a big shake-up at the Grubb & Ellis REIT. As InvestmentNews reported in November, the board of directors for Healthcare REIT II said it was changing sponsors, essentially dumping Grubb & Ellis and replacing it with Griffin Capital and the newly formed American Healthcare Investors LLC.

The top executives at American Healthcare are quite familiar with the Grubb & Ellis health care REIT. Jeff Hanson, American Healthcare's CEO, is former chairman and chief executive of the Healthcare REIT II, while Danny Prosky was executive vice president of health care real estate with Grubb & Ellis.

In fact, the duo left Grubb & Ellis and formed American Healthcare Investors in part to run Healthcare REIT II.

Now the pair are facing a hostile takeover.

American Realty Capital's bid for the Grubb & Ellis offering is about two-thirds in cash and one-third in stock, said Nicholas Schorsch, CEO of American Realty Capital. “We think of ourselves as a white knight for the investor in this situation.”

“We think we can create real value for [the REIT's] shareholders,” Mr. Schorsch said. “We were shocked that they said no.”

But Mr. Hanson had a different assessment. “We're not for sale,” he said. “We're one of the best nontraded REITs in the industry” from an operations and investing standpoint.

He added: “The roll-up proposal is a head scratcher. We're both raising equity through similar channels — the same broker-dealers and advisers.”

Griffin Capital Securities is the broker-dealer for the REIT. Mr. Hanson added that the Grubb & Ellis health care property trust is within weeks of closing on major real estate properties worth $278 million.

No doubt, the Grubb & Ellis Healthcare REIT is substantial and its portfolio is bigger than the American Realty Healthcare Trust. Indeed, American Realty Capital Healthcare's portfolio last month was $129.2 million, while the Grubb & Ellis Healthcare REIT has acquired more than $430 million of health-care-related assets, according to SEC filings.

The Grubb & Ellis REIT was the eighth-largest fundraiser in the industry, raising $244.6 million over the first three quarters of this year, according to MTS Research Advisors, a consulting firm.

In total, the REIT had raised about $451.5 million through the end of November, according to its filing today with the Securities and Exchange Commission. Over the past three months, the REIT on average has raised $31.5 million per month.

Mr. Schorsch declined to say what, if any, steps American Realty could take to acquire the Grubb & Ellis REIT.

Posts: 2
Joined: Tue Nov 01, 2011 2:19 pm

Re: Hostile Bid for Grubb Health Care From.....

Post by observer85 » Wed Dec 07, 2011 10:22 am

For the details of the offer and a copy of the reply from Grubb see the below link to an sec filing


Posts: 595
Joined: Mon Feb 28, 2011 8:21 pm

Re: Hostile Bid for Grubb Health Care From.....

Post by GeorgiaGulf » Thu Jan 05, 2012 4:20 pm

These guys are trying to get on the board! Interesting ploy- I dont think this has ever happened before.

American Realty again tries to take control of real estate investment trust
Company's execs seek board seats at the former Grubb & Ellis REIT

By Bruce Kelly

January 5, 2012
American Realty Capital has fired a second salvo in a hostile takeover bid for Griffin-American Healthcare REIT II Inc., a non-traded real estate investment trust that is in flux.

On Wednesday, Griffin-American Healthcare REIT, which has just changed its name from Grubb & Ellis Healthcare REIT II, said in a filing with the Securities Exchange Commission that executives affiliated with American Realty Capital are looking to muscle their way onto the REIT's board.

“We have received correspondence from a stockholder and another individual notifying us of their intention to nominate an alternative slate of directors for election at the 2012 annual meeting of stockholders,” the company said in the filing.

“The notices, which are substantially the same, name persons associated with one or more entities related to American Realty Capital, one of our competitors, as proposed nominees,” according to the filing. “The notices also identify such entities, and certain individuals associated with such entities, as ‘stockholder associated persons,' which in this case means that such persons are acting in concert with the individuals who submitted the notices.”

This isn't the first time that American Realty Capital, which sponsors several non-traded REITs, has attempted to take control of the Griffin-American Healthcare REIT, which has experienced several changes in the past couple of months.

In November, the REIT severed its relationship with its former sponsor, Grubb & Ellis Co., in favor of two newly formed co-sponsors, American Healthcare Investors LLC and Griffin Capital Corp.

Last month, Griffin-American Healthcare REIT II said that it has rejected an unsolicited, conditional offer from American Realty Capital Healthcare Trust Inc. to buy the REIT's outstanding shares at $9.01 a share. Griffin-American is raising money from investors at $10 a share.

American Realty Capital's unsolicited bid was widely thought to be the first hostile takeover attempt of a non-traded REIT.

In response to a call from InvestmentNews, Jeffrey Hanson, Griffin-American's chairman and chief executive, issued a statement that said American Realty Capital was attempting to “disrupt” the REIT as it goes through its period of transition.

The REIT “is one the best-performing non-traded REITs in the industry, and we certainly appreciate American Realty Capital's high regard for our offering,” the statement said.

“In our view, American Realty Capital's various overtures are an attempt to disrupt a very successful sponsorship transition which will be completed tomorrow. Given the surrounding circumstance, we believe that these overtures place American Realty Capital's interests above those of stockholders,” according to the statement.

Indeed, Griffin-American has made strides in recent days to complete its transition.

On Tuesday, the company said that the Financial Industry Regulatory Authority Inc. had issued a “no objection letter” to Griffin Capital Securities to become the company's new broker-dealer manager. The REIT also officially changed its name, eliminating the reference to Grubb & Ellis.

“We believe very firmly the shareholders have a right to choose,” said Nicholas Schorsch, CEO of American Realty Capital. “This is about replacing the board and, in addition, to making an offer to investors. We want to make sure shareholders have the ability to make the decisions, not Jeff Hanson.”

Those decisions include fees that the REIT pays to its advisers, Mr. Schorsch said.

In unrelated news, Grubb & Ellis said that on Tuesday, the New York Stock Exchange notified the company that it intends to delist the company from the Big Board. The NYSE notified Grubb & Ellis, once a leading brand name in real estate, that it wasn't in compliance with its continued listing standard of a market capitalization of $15 million over a 30-day period.

Grubb & Ellis intends to appeal the NYSE's decision. Tomorrow, the stock will begin trading on the OTCQB — as a pink sheet — under a symbol yet to be determined, according to an SEC filing.

Oh, how the mighty have fallen. This would make such a great book.

Post Reply