Highlands REIT Rejects MacKenzie’s Mini-Tender, Citing 86% Discount to NAV
The board of directors of Highlands REIT Inc. has unanimously recommended that shareholders reject an unsolicited mini-tender offer from MacKenzie Capital Management LP to purchase shares of the nontraded REIT at $0.04 per share — a price the board said is 86% below its own current estimated value of $0.29 per share and designed, by MacKenzie’s own admission, to generate a profit for the offeror.
The offer, filed with the U.S. Securities and Exchange Commission today, carries a $25 transfer fee per transaction, no withdrawal rights, and no independent receiving agent — meaning tendered shares would be routed through MacKenzie or an affiliate before payment is made. MacKenzie’s offer documents acknowledge that the $0.04 price was set at the low end of recent trading prices and “designed to result in a profit for the offeror.” The board also flagged an arbitration clause in the offer that it said may be partially unenforceable as a matter of law and was not disclosed in MacKenzie’s offer documents.
The offer lands against nearly a decade of declining estimated value. When Highlands was spun off from InvenTrust Properties Corp. in April 2016 — inheriting its portfolio of non-core assets that included special-use retail properties in tertiary markets, a correctional facility, and unimproved land — the board established an estimated value of $0.36 per share. Nine years later, a May 2025 independent appraisal commissioned by the board put estimated value at $0.29 per share, down from $0.31 in December 2024 and well below the $0.36 at separation. The company has not paid a regular distribution to shareholders, its 2025 net loss widened to $11.1 million from $1 million in 2024, and the board has described the timing of any future liquidity event as uncertain.
The $0.04 offer price represents the third time MacKenzie has targeted Highlands shareholders, and by far the lowest. In 2018, an affiliate of MacKenzie offered $0.17 per share for up to 45 million shares — then characterized as a 51.4% discount to Highlands’ NAV of $0.35. In July 2023, MacKenzie returned at the same $0.04 price, when the board’s then-current estimated value was $0.28 per share and LODAS Markets secondary trades were clearing at $0.12. The board rejected that offer as well. Today’s offer is unchanged in price from the 2023 attempt but arrives with the board’s current appraisal 3.6% higher than at the time of the prior rejection — the gap between MacKenzie’s offer and the board’s estimate has widened.
The board’s valuation is based on an appraisal as of March 31, 2026, by Real Globe Advisors, an independent real estate advisory firm, which estimated Highlands’ per-share value at a midpoint of $0.33 before applying a $0.05 deduction for estimated corporate-level transaction costs associated with a future liquidity event. The board selected $0.29 per share — the low end of the final range — citing unfavorable market conditions affecting the Denver multifamily portfolio, significant leasing risk in certain assets, and the fund’s difficulty finding buyers for its non-core holdings. The fund carries $120 million in net debt against $320 million in total assets, with 722.2 million shares outstanding on a fully diluted basis.
In its rejection notice, the board acknowledged the reality facing shareholders directly: because Highlands shares are not listed on an exchange and there is no established public trading market, “stockholders have few alternatives available to sell their shares.” None of Highlands’ directors, officers, subsidiaries, or affiliates intends to tender shares, the board said.
MacKenzie’s Highlands offer is one piece of a sustained strategy the firm has deployed across the nontraded REIT and alternatives market for more than a decade. The firm and its affiliates have targeted a range of illiquid alternative investment vehicles, typically offering prices at significant discounts to sponsor-published NAV estimates and framing the offers as liquidity alternatives for investors trapped in redemption-constrained or terminal funds.
In recent years, MacKenzie has targeted investors in some of the largest programs in the nontraded universe. In 2023, MacKenzie offered $9.27 per share for Blackstone Real Estate Income Trust Class S shares, framing the offer around BREIT’s redemption queue backlog. In July 2024, MacKenzie offered $17.50 per share for Starwood Real Estate Income Trust shares — approximately 24% below Starwood’s then-estimated NAV — and in October 2025 returned to SREIT shareholders with a $16.25 offer representing a 22% discount to NAV.
The Highlands offer differs from MacKenzie’s recent activity at BREIT and Starwood in one important structural respect. At BREIT and Starwood, MacKenzie was targeting investors in actively managed, institutional-quality funds experiencing temporary redemption constraints — funds with large, diversified portfolios, ongoing capital formation, and operating management teams. At Highlands, the target is a terminal wind-down vehicle that has been attempting to liquidate inherited non-core assets since 2016, has never paid a regular distribution, and whose board itself describes a future liquidity event as uncertain in timing and form.
The MacKenzie making tender offers to nontraded REIT shareholders is MacKenzie Capital Management LP, a Moraga, Calif.-based firm that has specialized in purchasing illiquid real estate securities at a discount since 1982. It is a separate entity from MacKenzie Realty Capital Inc., a publicly registered nontraded REIT that listed on Nasdaq under the ticker MKZR in November 2024 and itself has pursued tender offers in Starwood and other nontraded programs as part of its investment strategy. Both entities are affiliated with MacKenzie chief executive officer Robert Dixon. The two entities pursue different structures: MacKenzie Capital Management’s tender offers are private transactions for the benefit of fund affiliates, while MacKenzie Realty Capital’s offers are investments made through a registered vehicle with its own shareholders.
Highlands was incorporated in December 2015 and spun off from InvenTrust Properties Corp. in April 2016. The fund’s portfolio consists primarily of multifamily properties in Denver and other markets, multi-tenant flex office, multi-tenant retail, a correctional facility, and unimproved land — assets the company characterizes as “non-core” that are “difficult to lease, finance and refinance” and “relatively illiquid compared to other types of real estate properties,” the company said. The fund reported total revenues of $37.4 million in 2025, up from $36.1 million in 2024, but posted a net loss of $11.1 million, compared with $1 million in 2024. Robert J. Lange was appointed chief executive officer in March 2025, succeeding Richard Vance, who retired after nearly a decade leading the fund’s wind-down effort.
In October 2023, Highlands itself attempted to provide shareholders with an exit, conducting a self-tender offer at prices between $0.12 and $0.17 per share — a range that, even at the low end, was three times MacKenzie’s current offer price. That offer allowed shareholders to specify their own price within the range.
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