American Healthcare REIT: Decline in NAV and Secondary Sales Price 

The White Law Group is continuing to investigate securities claims involving American Healthcare REIT (formerly Griffin-American Healthcare REIT IV).  

American Healthcare REIT Inc., a healthcare real estate investment trust (REIT) with approximately $4.6 billion real estate assets, invests in healthcare real estate assets. In a letter to shareholders this week, the board of American Healthcare REIT Inc. claimed neutrality regarding an unsolicited tender offer from CMG Partners LLC and its affiliates. 

Tender Offer 73% Below Net Asset Value 

CMG Partners has reportedly extended a tender offer to purchase 250,000 shares of Class T and Class I common stock for $8.50 per share, or the equivalent of $2.13 per share prior to its one-for-four reverse stock split last year. 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. According to the letter, CMG Partners’ offer is approximately 73% less than the most recently published net asset value.  Shares of the REIT most recently traded on Central Trade and Transfer for $15.50 per share. To learn more, please see: What is a Mini-Tender Offer?

Reduced Distributions for American Healthcare REIT

On March 15, 2023, American Healthcare REIT’s board of directors reportedly 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)     

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. In addition, the share repurchase plan was suspended except for requests resulting from the death or qualifying disability of stockholders.      

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.      

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.     

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.     

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