Shareholders have been seen sent a letter by Sila Realty Trust Inc. recommending a rejection of the unsolicited tender offer made by CMG Partners and its affiliates, CMG Income Fund II LLC, CMG Liquidity Fund LLC, and Blue River Capital LLC.
Sila Realty Trust is a non-traded real estate investment trust (REIT). It was earlier known as Carter Validus Mission Critical REIT II.
The offer made by CMG, which they seek to influence shareholders against, is for purchasing up to 300,000 Class A shares for $3.57 each. This is almost 59% lower than the last NAV announced by the REIT in December 2020, which was $8.69. If nothing changes till then, CMG’s offer will expire on the 15th of July, 2021.
“We believe the CMG offer represents an attempt by CMG to catch current stockholders of the company off-guard and acquire the shares at a low price in order to make a profit and, as a result, deprive the stockholders that tender their shares of the company’s common stock of the full potential long-term value of the shares,” said Michael Seton, Sila’s CEO and President, justifying efforts at dissuading shareholders from accepting the offer.
As of the 31st of March, 2021, Sila was the owner of 153 real estate properties. This was constituted by 29 data centers and 124 healthcare properties. These were widely dispersed across the United States and located in 70 unique markets. Put together, the estimated purchase price of these properties adds up to $3.2 billion.
Sila has announced plans of selling Its entire portfolio of 29 data center properties to subsidiaries of Mapletree Industrial Trust, a Singapore Exchange-listed REIT. The value is understood to be in excess of $1.3 billion. It is expected that the deal will be consummated in Q3 of 2021.
Sila Realty Trust Lawsuits
Sila Realty Trust (former Carter Validus) investors have filed lawsuits against financial advisor advisors and broker-dealers that sold them. Investors have seen huge losses when they go to sell the securities. Many alleged that they were unaware of the risks and liquidity issues.
Haselkorn & Thibaut, a national investor law firm, is representing investors in multiple FINRA arbitration lawsuits. The firm has set up a toll-free number at 1-800-856-3352 for investors to call for advice.
Investment industry experts have warned that non-traded REITs can be complex and risky investments that should not be sold to sophisticated investors.
Brokerage firms continue to promote this type of investment despite the risk of investing in non-traded REITs. This is due to the high commissions associated with selling and creating them. The commissions that brokerage firms receive for selling non-traded REITs are typically between 7-10%, which is much higher than the average commission for traditional investment types.
Investors have the option of using FINRA’s arbitration forum to resolve disputes. Brokers and brokerage firms that make unsuitable investment recommendations or fail to disclose all risks associated with investments could be held liable in a FINRA arbitration case.
