November 22, 2021 Comments (0) Blog, Current Investigations, Securities Fraud

American Healthcare REIT: Griffin-American Healthcare REIT III & IV Merger

Recovery of Griffin-American Healthcare REIT III Losses, featured by Top Securities Fraud Attorneys, The White Law Group

The White Law Group is investigating securities claims involving American Healthcare REIT.

American Healthcare REIT Inc., a healthcare real estate investment trust with approximately $4.2 billion real estate assets, reportedly invests in healthcare real estate assets, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities. 

American Healthcare REIT, Inc. (formerly known as Griffin-American Healthcare REIT IV, Inc.) announced on October 1 that it has completed its merger with Griffin-American Healthcare REIT III, Inc.  in a tax-free, stock-for-stock transaction that created a combined company with a gross investment value of approximately $4.2 billion in healthcare real estate assets, according to a press announcement.  

Last May we reported some concerns for investors ie that distribution payments were 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. 

Further, the recent secondary sales price of Griffin-American Healthcare REIT III may suggest losses for investors. Shares of the REIT sold for $5.70 per share, according to Central Trade & Transfer, a secondary market for alternative investments. The original offering price was $10.00 per share. 

The company indicated that the coronavirus (COVID-19) global pandemic presents a challenge to owners and operators of healthcare facilities and while the company has not yet experienced  ”a material impact to our operations as a result of the pandemic, we anticipate that this will change as the virus continues to spread.”   

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.  

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.   

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 that investors purchase high-risk non-traded REIT investments. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them. 

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 Griffin-american Healthcare REIT III or 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 www.whitesecuritieslaw.com. 

  

 

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