Highlands REIT Buys Back 18.7% of Stock in Oversubscribed $0.20 Tender
Highlands REIT Inc. stockholders tendered more shares than the company set out to buy in its $25 million self-tender offer, and the company accepted all of them, repurchasing about 18.7% of its outstanding common stock at $0.20 per share, a 31% discount to its own most recent estimate of the stock’s value.
About 135.4 million shares were tendered and not withdrawn before the offer expired at 11:59 p.m. ET on Sept. 29, the nontraded real estate investment trust said. That topped the 125 million shares Highlands REIT originally offered to purchase but fell within the additional 2% of outstanding shares, or about 14.5 million, that the company could accept without amending or extending the offer. Highlands REIT exercised that option and accepted every tendered share for an aggregate purchase price of about $27.1 million, excluding fees and expenses. No tendering stockholder was prorated.
The demand came at a price well below the company’s own valuation. As AltsWire reported when the offer launched, the board in May approved an estimated value of $0.29 per share on a fully diluted basis as of March 31, based on an appraisal by independent firm Real Globe Advisors LLC. That figure was down $0.02 from the company’s December 2024 estimate, Robert Lange, president and chief executive officer, said in remarks prepared for the company’s May annual meeting.
The tender price still ran above where the stock had been changing hands. Robert A. Stanger & Co. recorded secondary-market transactions in Highlands REIT shares between $0.04 and $0.14 per share from April through June, according to the company, which said market-maker transaction fees push many stockholders’ effective sale price below that range.
The board made no recommendation on whether stockholders should tender, and the company said none of its directors, executive officers, or affiliates intended to tender shares. That stance differed from May, when Highlands REIT urged stockholders to reject an unsolicited mini-tender offer from MacKenzie Capital Management LP at $0.04 per share, less a $25 transfer fee.
The $0.29 estimate also predates a new lease at one of the company’s properties. In July, a Highlands REIT subsidiary signed an 88-month lease with GEO Secure Services LLC for the company’s correctional facility in Hudson, Colo. Base rent of $250,000 per month begins four months after the lease’s Aug. 1 commencement and rises to about $958,333 per month on the earlier of the property’s occupancy or the lease’s six-month anniversary, with 3% annual increases after that. The lease was not reflected in the $0.29 estimate, and the company said it may have a material impact on the value of its assets and, accordingly, on the estimated per share value. The company told stockholders to consider the lease’s potential impact when deciding whether to tender.
Payment for the accepted shares will be made promptly, the company said. Based on the 722.65 million shares Highlands REIT reported outstanding as of Aug. 31, about 587 million shares will remain after the purchase. The company has said the buyback increases the proportional ownership of stockholders who did not tender, and that continued refinement of its non-core portfolio positions it for a potential liquidity event, though it has not given a timeline.
Highlands REIT was spun off from InvenTrust Properties Corp. in 2016. It owns a portfolio of multifamily, retail, office, and industrial properties, a correctional facility, and unimproved land.
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