VineBrook REIT Tender Draws Three Times Its Cap at 37% Below NAV
VineBrook Homes Trust Inc. stockholders tendered roughly three times as many shares as the nontraded real estate investment trust offered to buy in its $30 million self-tender priced about 37% below net asset value, leaving the company to prorate purchases at about one share in three, according to preliminary results.
About 2.75 million shares of Class A common stock were tendered and not withdrawn before the offer expired at 5 p.m. ET on Oct. 5, according to a preliminary count by depositary LODAS Transfer LLC. VineBrook expects to buy 909,090 shares at $33 per share, or about $30 million, representing about 3.46% of its outstanding shares. The preliminary proration factor is 33.02%, the company said. Shares not purchased will be returned, and final results, including the final proration factor, will be announced after the depositary confirms the count.
The demand came despite a steep discount. As AltsWire reported when the offer launched on Sept. 4, the $33 price was 62.6% of VineBrook’s most recent NAV of $52.68 per share as of June 30, a discount of about 37%. The board made no recommendation on whether stockholders should tender, and the company said none of its directors or executive officers intended to participate.
The tender was VineBrook’s first broad liquidity opportunity since December 2022, when it suspended its share repurchase plan except in cases of death, disability, or similar hardship. Stockholders’ only other outlet has been the LODAS Securities LLC market-making service.
In the offer documents, VineBrook said its board does not intend to resume the share repurchase plan after the offer expires, subject to the same hardship exceptions.
VineBrook funded the purchase in part with a $25 million loan. As previously reported by AltsWire, two VineBrook subsidiaries borrowed the money from The Ohio State Life Insurance Co. at 10% annual interest, with a one-year maturity, a 1% origination fee, and a 1% exit fee on prepayment. VineBrook said the lender “may be deemed to be an affiliate” of its external adviser, NexPoint Real Estate Advisors V LP, through common beneficial ownership. With the loan in place, VineBrook deemed the offer’s financing condition satisfied.
In setting the $33 price, the board said it considered the most recent NAV, prices at which shares changed hands through LODAS’ market-making service, and how publicly traded single-family rental REITs American Homes 4 Rent and Invitation Homes trade relative to their estimated NAVs. VineBrook said the $33 price should not be read as the fair value of the shares.
VineBrook is an externally advised REIT that owns single-family rental homes primarily in Midwestern, heartland, and Southeastern U.S. markets. Its shares are not listed on an exchange, and the company has said its board does not consider current market conditions conducive to a listing.
For stockholders who stay in, the buyback retires shares well below the stated NAV. But VineBrook financed most of it with 10% debt from a lender that may be deemed an affiliate of its adviser, and the repurchase plan remains shut, leaving the LODAS market-making service as the main exit for stockholders who want to sell.
Visit the AltsWire directory page.
