CV MC REIT – Investigation Update

Securities Investigation – CV MC REIT – Carter Validus Mission Critical REIT

The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended high risk non traded REITs such as CV MC REIT (Carter Validus Mission Critical REIT) to investors.

On August 13, 2018, the company announced that it had entered into a modification of a credit agreement on its revolving credit facility with KeyBank National Association, according to SEC filings.

The modifications reportedly reduced the tangible net worth base amount of the REIT to $475 million, from $600 million, and limited distributions to $0.106 per quarter, and limiting future distributions to 95% of annualized funds from operations.

According to reports, the modifications effectively limit CV MC REIT’s ability to over distribute from FFO, and reduce the amount of credit available from KeyBank.  CV MC REIT noted the modifications are made in the wake of financial difficulties encountered with the REIT’s major tenant, Bay Area Regional Medical Center.

As we told you in May, Bay Area Regional Medical Center, LLC, which accounted for approximately 20.9% of Carter’s 2017 rental revenue, has closed its operations and filed for bankruptcy.

Update on April 12 – Carter Validus Merger

According to reports on April 12, Carter Validus Mission Critical REIT Inc. (CVMC REIT I) and Carter Validus Mission Critical REIT II Inc. have entered into a definitive agreement to merge in a stock and cash transaction, creating an entity valued at approximately $3.2 billion.

The transaction is expected to close in the second half of 2019, with the approval of CVMC REIT I stockholders.

The combined company will retain the name Carter Validus Mission Critical REIT II Inc. and will own 146 healthcare and data center properties in 33 states, totaling approximately 8.4 million square feet of space, according to reports.

Under the new agreement, CVMC REIT I stockholders will reportedly receive $1.00 per share in cash and 4681 shares of CVMC REIT II Class A common stock for each share of CVMC REIT I common stock owned.

CVMC REIT I declared an estimated net asset value of $5.33 per share, as of June 30, 2018, according to SEC filings. The company’s previously declared NAV per share was $9.26. Shares were originally sold for $10.00 each.

Update on April 23, 2019 – New Tender offer

Mackenzie Realty Capital has just extended an unsolicited tender offer to purchase shares of Carter Validus REIT for just $3.16/share.

According to Mackenzie, the merger is subject to closing conditions and “its consummation cannot be assured. Even if approved, however, there can be no guarantee that the merger will close in a timely manner, or at all, and does not provide full cash-out to Carter stockholders.”

Further, the repurchase program is now reportedly limited to requests in connection with the death, qualifying disability, or involuntary exigent circumstances of a stockholder. Also, Carter Validus II could be similarly limited, making it difficult for investors to sell any or all their shares in the repurchase program.

Non-traded REITs such as Carter Validus Mission Critical REIT are high-risk, complex, illiquid investments. They are typically only suitable for sophisticated investors.

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.

Free Consultation with a Securities Attorney

If you suffered losses investing in CV MC 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 Vero Beach, Florida.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.

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