Written by The White Law Group• June 14, 2024• 8:53 am• Investment Loss Recovery

SILA Realty Trust IPO News

Sila Realty Trust Inc. Tender Offer $3.52 per share, featured by top securities fraud attorneys, The White Law Group

SILA Realty Trust Shares Trading at Significantly Less than NAV

The White Law Group continues to investigate claims involving SILA Realty Trust Inc. (formerly known as Carter Validus Mission Critical REIT II). Our firm has handled numerous cases representing investors who suffered losses investing in high-risk non-traded REITs like Sila Realty Trust at the recommendation of their financial advisor.

Table of Contents

?Sila Realty Trust Inc. began trading on the New York Stock Exchange (NYSE) under the ticker symbol “SILA” on June 13, 2024, with shares opening at $19 and closing at $22.70, marking a 19.47% increase on its first day. While this rise may seem positive, it actually represents a significant drop from the company’s estimated net asset value (NAV) of $29.92 as of October 31, 2023. This gap suggests that the market values the company’s shares below its underlying assets, which could be troubling for investors.

Sila Realty Trust’s most recently reported an estimated NAV per share of $29.92 was adjusted for a one-for-four reverse stock split that was effective May 1, 2024.

Currently, the REIT owns 131 healthcare properties and two undeveloped land parcels with total assets of $2.1 billion and outstanding debts of approximately $0.5 billion as of year-end 2023, according to Fact Right. Healthcare REITs, including Sila, are generally trading at a 2% discount to consensus NAV, with varying valuation ranges among different REITs in the healthcare sector.

Upon the listing all outstanding shares of Class I, Class T and Class T2 common stock will automatically convert into Class A common stock on a one-for-one basis. Class A common stock will then be the only class of common stock outstanding.

Decrease in Value – Sila Realty Trust

According to a letter to shareholders on December 18, 2023, Sila’s Board of Directors approved a value of $7.48 per share for the company’s different types of common stock. They determined this value from an independent firm called Cushman & Wakefield, which evaluated the value of the company’s properties and lands as of October 31, 2023.

The $7.48 value per share is calculated by taking the estimated value of the company’s assets, subtracting its estimated liabilities, and then dividing that by the number of shares outstanding.

This value of $7.48 per share is a decrease from the previous value of $8.13 per share on March 31, 2023.

According to the letter, the per share repurchase price is based on the most recent estimated value of the shares. As a result, the Board’s determination of the Estimated Per Share NAV of $7.48 per share will serve as the repurchase price on the expected first quarter repurchase date of January 31, 2024.

SILA Realty Trust – Unsolicited Tender Offer

According to a letter to shareholders on November 21, 2023, Comrit Investments 1, Limited Partnership notified SILA Realty Trust that Comrit is offering to purchase up to an aggregate of 373,665 Class A shares, 53,381 Class I shares, and 106,761 Class T shares, at a price of $5.62 per Share.

Lodas Markets, a secondary market for non-traded investments, is selling shares of SILA Realty Trust for just $4.80 per share. Shares were originally offered for $10 per share.

Comrit reportedly acknowledges that the price of $5.62 per Share offered is below the Company’s current estimated net asset value (“NAV”) of $8.13 per Share.

According to the letter, the Board says its aware that the Company’s share repurchase program is limited to death and “involuntary exigent circumstances”, and stockholders may need near-term liquidity. The Company notes that it can’t guarantee that a future liquidity event will be successful and will enable shareholders to sell shares at a price more than the Comrit offer price per Share.

The Company further notes in the letter that since it is a non-exchange traded REIT, there is a limited market for the Company’s common stock. There can be no certainty regarding the long-term value of the Company’s common stock. In the past, Sila has asked shareholders to reject these types of non-solicited tender offers, this time the Board reportedly “remains neutral
and makes NO RECOMMENDATION on whether the Company’s stockholders should accept or reject the Comrit Offer.”

SILA Realty Trust’s Tenant files for Chapter 11

According to the DI Wire on June 7, 2023, Sila Realty Trust Inc. announced that GenesisCare USA Inc., one of the REIT’s tenants, filed for Chapter 11 bankruptcy protection.

GenesisCare reportedly operates 17 radiation oncology and related use properties that are owned by Sila, among other operations. GenesisCare is seeking U.S. bankruptcy court approval to access already sourced debtor-in-possession financing to continue to operate its business in the near term, according to bankruptcy filings. GenesisCare notes that its plan for reorganization includes a sale of its U.S. business within a six-month period.

According to the article, the company’s lease obligations with Sila have not been included in any motions GenesisCare has filed, and Sila reports that GenesisCare has met its lease payment obligations due to the company through May 2023.

Risks of Investing in Non-Traded REITs like SILA Realty Trust

Non-traded REITs are complex and often risky investments which should only be sold to high-net worth and sophisticated investors.

Aside from the risks of investing in non-traded REITs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation. Brokerage firms generally make between 7-10% for selling a non-traded REIT, which is far more than the typical commission for more traditional investment types. They are also illiquid, meaning they aren’t listed on any exchange and when you are ready to sell, there may not be a buyer. If there is a buyer, you may end up selling your shares at a loss.

FINRA, the regulator who oversees brokers and brokerage firms, continues to monitor the sale of non-traded REITs, in particular, the ways in which broker/dealers marketed and sold the products to investors. In many cases, broker-dealers marketed these investments as safe and secure.

Broker Due Diligence

Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.

Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.

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.

FINRA Attorneys

Fortunately, FINRA does provide an arbitration forum for investors to resolve such disputes. 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 through FINRA arbitration.

The FINRA attorneys at the White Law Group can help you with the arbitration process including evaluating the merits of your claim and determining whether you have a strong case for arbitration. Our attorneys will draft the statement of claim and represent you at the arbitration hearing, present evidence and make arguments on your behalf. They may be able to negotiate a settlement for you before going to arbitration.

Please contact The White Law Group at 1-888-637-5510 for a free consultation, to determine whether you may be able to recover investment losses incurred because of investing in SILA Realty Trust.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.