American Healthcare REIT: Liquidity & Lawsuits
On August 6, 2024, American Healthcare REIT Inc. (NYSE: AHR) saw its shares fall nearly 3% as the lock-up period ended for legacy non-traded REIT shareholders. AHR, formed by merging Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors in 2021, debuted on the NYSE in February 2024 with an IPO of 56 million shares at $12 each.
Legacy investors, holding approximately 66 million shares initially bought for for the equivalent of $40 per share (adjusted for a one-for-four reverse stock split executed in 2021) were finally able to trade their shares.
The stock closed at $15.67, down 2.91%, amid a market-wide downturn. AHR reported second-quarter net income of $0.01 per share and revised its 2024 guidance positively. Normalized funds from operations were $0.33 per share, down from $0.37 in June 2023.
American Healthcare REIT (AHR) – Liquidation – Initial Public Offering IPO
American Healthcare REIT Inc., formed by merging Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors in 2021, completed its initial public offering by selling shares at the lower end of the marketed range, generating $672 million in proceeds, on February 7, 2024. The Irvine, California-based company, specializing in senior housing and assisted living properties, sold 56 million shares for $12 each, falling within the expected range of $12 to $15 per share.
The REIT started the first day trading day at $12.85. At the close of trading, shares closed at $13.22.
4 for 1 Reverse Stock Split – NAV $31.40
The REIT’s current estimated net asset value per share for Class T and Class I common stock was $31.40 as of March 31, 2023 after a 4 – 1 reverse stock split.
This IPO follows a trend of modest performances by companies entering the public market. American Healthcare REIT now has a market value of approximately $1.5 billion based on its outstanding shares listed with the U.S. Securities and Exchange Commission.
American Healthcare REIT’s IPO is one of 10 expected on U.S. exchanges this week, including a biotechnology firm, an insurer, and a Mexican grocery chain, collectively aiming to raise over $1 billion.
American Healthcare, which filed for an IPO in 2022, plans to utilize the proceeds to reduce debt, according to its filings.
The company’s portfolio includes medical office buildings, senior housing, skilled nursing facilities, and hospitals across various states, with assets valued at approximately $4.6 billion as of September 30. Led by Bank of America Corp. and Morgan Stanley, American Healthcare’s shares are scheduled to commence trading on the New York Stock Exchange under the symbol AHR.
Tender Offer 58% Below Net Asset Value
On January 11, 2024, American Healthcare REIT responded to a third-party tender offer from Comrit seeking to purchase up to 228,136 shares of the REIT at a 58% discount to its most recently estimated NAV per share. The board noted that Comrit’s offer price of $13.15 per share is equivalent to $3.29 per share prior to the one- for -four reverse stock split in November 2022.
The board of the REIT reportedly remained neutral on whether shareholders should accept or reject the tender offer.
American Healthcare REIT – Suspends Repurchase Plan
The board noted uncertainties on the likelihood of achieving a liquidity event including the prospective listing of the common stock on the NYSE (New York Stock Exchange) that was disclosed in a registration statement back in September 2022. The REIT reportedly suspended its share repurchase plan in November 2022 except for requests resulting from the death or qualifying disability of stockholders.
According to the board, the secondary sales prices from September to December 2023, on CTT Auctions were in a range of $14.36 to $15.25 per share, 9-16% higher than the Comrit tender offer price.
The REIT’s current estimated net asset value per share for Class T and Class I common stock was $31.40 as of December 31, 2022.
Reduced Distributions for American Healthcare REIT
On March 15, 2023, American Healthcare REIT’s board of directors authorized a reduced quarterly distribution from $0.40 per share to $0.25 per share to the company’s Class T and Class I common stockholders of record as of the close of business on April 4, 2023, for 2023 Q1.
According to the REIT, the distribution reduction was due to the need to preserve liquidity to help the company “achieve its long-term strategic goals.”
The REIT, formerly known as Griffin-American Healthcare REIT IV, Inc. completed a merger with Griffin-American Healthcare REIT III, Inc. on October 1, 2021. (See American Healthcare REIT: Griffin-American Healthcare REIT III & IV Merger)
Decline in Value
American Healthcare REIT notes that the reason for the decline in NAV is due to the “powerful market factors [that] negatively impacted our real estate values.” High inflation and rising interest rates were also part of the problem, according to the company.
As we have previously reported in 2020, the REIT cut distributions cut in half — from an annualized rate of $0.60 per share to $0.30 per share beginning with the April 2020 distribution, which was to be paid on May 1, 2020.
Is a Non-traded REIT a Suitable Investment for you?
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation of American Healthcare REIT. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
Non-traded Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.
Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling REITs – as high as 15%. Brokers have an obligation to make investment recommendations that are consistent with their clients’ risk tolerance, net worth, investment objectives and experience in the market. Unfortunately, in many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.
In addition to the high risks, non-traded REITs, like American Healthcare REIT often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.
Class Action vs. Individual FINRA Arbitration Lawsuit
People often wonder whether a large class action lawsuit is a better litigation option for them than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
How to Recover Investment Losses – FINRA Lawsuits
FINRA (Financial Industry Regulatory Authority) is a self-regulatory organization that oversees the securities industry in the United States.
If your broker failed to due diligence on your investments and you lost money, you may be able to file a FINRA Dispute Resolution claim.
The securities attorneys at The White Law Group may be able to help you. The intricacies of FINRA arbitration can be challenging to navigate, and a skilled attorney with expertise in securities law can significantly enhance your prospects of a successful outcome.
The White Law Group can help you evaluate the strength of your case, draft a well-structured statement of claim that accurately presents your allegations of fraud and desired damages, and provide representation during the arbitration hearing by presenting evidence and making compelling arguments on your behalf.
Additionally, our attorneys can engage in negotiation efforts for a potential settlement before the arbitration process begins. Opting for our securities attorneys ensures that your rights are safeguarded throughout the arbitration process, maximizing your likelihood of achieving a favorable resolution.
Free Consultation
If you suffered losses in American Healthcare REIT and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.
Tags: American Healthcare REIT, American Healthcare REIT Inc. lawsuit, Griffin American Healthcare REIT IV, IPO, non-traded REITs, tender offer Last modified: August 6, 2024
