Written by The White Law Group• June 29, 2021• 1:30 pm• Blog, Current Investigations

Griffin REITs Merge to become American Healthcare REIT

Griffin-American Healthcare REITs Merge to become American Healthcare REIT Inc., featured by top securities fraud attorneys, The White Law Group

American Healthcare REIT Inc. Securities Investigation

The White Law Group continues to investigate potential securities claims involving broker dealers who may have unsuitably recommended non-traded REITs such as American Healthcare REIT to investors.

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The Griffin-American Healthcare REIT III Inc. (Griffin REIT III) and Griffin-American Healthcare REIT IV Inc. (Griffin REIT IV), two non-traded real estate investment trusts are planning to merge to create American Healthcare REIT Inc., a healthcare real estate investment trust with approximately $4.2 billion real estate assets, according to an article in the DI Wire this week.

The REIT’s portfolio will include healthcare real estate assets comprising 314 medical office buildings, senior housing communities, skilled nursing facilities and other real estate-related investments, according to filings with the SEC.

Last October, the two REITs were reportedly investigating and analyzing strategic alternatives, and also declared new decreased net asset values per share for their respective common stock.

Griffin REIT III declared a new net asset value of $8.55 each, as of September 30, 2020, a decline of 9 percent compared to the previous valuation of $9.40 per share, as of June 30, 2019, according to filings with the SEC.

As of September 30, 2020, Griffin REIT IV’s Class T and Class I shares were valued at $9.22 each, a decline of 3.4 percent compared to the previous NAV of $9.54, as of December 31, 2019. Shares were originally sold for $10.00 per share.

In January 2021, we reported that Griffin REIT III’s board urged shareholders to reject a tender offer by Comrit Investments 1, Limited Partnership, to purchase up to 554,529 shares of the REIT’s common stock for $5.41 each.

How Does a Merger Affect Shareholders?

Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.

Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses.

In exchange for each share of Griffin REIT III common stock, its stockholders will receive 0.9266 of a share of Griffin American Healthcare REIT IV Class I common stock. Following the close of both transactions, current Griffin REIT III stockholders will own approximately 65.2 percent of American Healthcare REIT, Griffin REIT IV stockholders will own approximately 29.7 percent, the management team will own approximately 2.3 percent, and other sellers in the AHI acquisition will own approximately 2.8 percent.

The company notes that merger transactions will plan to close in the fourth quarter of 2021, with a listing planned by the end of 2022.

Potential Lawsuits to Recover Financial Losses

Investors looking to sell alternative investments, like American Healthcare REIT, often have difficulty finding a buyer, and can suffer significant losses on the sale.

Your financial advisor has a responsibility to perform due diligence on any investment before recommending it to you. If your advisor unsuitably recommended Griffin-American Healthcare REIT III or Griffin- American Healthcare REIT IV and you lost money, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

The Financial Industry Regulatory Authority (FINRA) provides an arbitration forum for investors to resolve disputes with their brokerage firm. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.