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AR Capital's Healthcare Trust Seeking Strategic Options, Joins Wave of REITs For Sale

AR Capital's Healthcare Trust Seeking Strategic Options, Joins Wave of REITs For Sale

Healthcare Trust, Inc. (HTI), a publicly registered, non-traded real estate investment trust formerly operating as American Realty Capital Healthcare Trust II, Inc. (ARC HT II), said it has initiated a strategic review process “to identify, examine, and consider a range of strategic alternatives.” The REIT focuses primarily on healthcare-related assets including medical office buildings (MOBs), seniors housing, and other healthcare-related facilities. The company is in the process of engaging a leading real estate investment banking group as financial advisor, and has retained Gibson, Dunn & Crutcher LLP as special legal counsel in connection with the strategic review process. The move comes in the midst of a crowded field of REITs being put up for sale and exploring strategic options, including American Farmland Company (NYSE MKT: AFCO), AdCare Health Systems Inc. (NYSE MKT: ADK), KBS Legacy Partners Apartment REIT (non-traded), KBS Strategic Opportunity REIT (non-traded), Stratus Properties Inc. (NASDAQ: STRS), and InvenTrust Properties Corp. (non-traded, formerly Inland American), which announced the spin-off of its Highlands REIT Inc. two weeks ago. “The steps we are taking represent our commitment to maximize value to our shareholders over the long term,” said the company’s chairman Randolph Read. ARC HT II had completed a $2.1 billion non-listed public offering as of November 17, 2014, at an initial price per share of $25.00. On March 18, 2015 ARC HT II announced its intention to list its common stock on a national stock exchange under the symbol “HTI” with the assistance of its financial advisors, KeyBanc Capital Markets and RCS Capital, the investment banking and capital markets division of Realty Capital Securities, LLC. However, the listing failed to materialize. As of December 31, 2015, HIT owned an investment portfolio of 166 properties with 8.5 million sq. ft., consisting of 81 MOBs with a 91% occupancy rate, 58 senior housing properties, 20 post-acute care properties, 4 hospitals, 2 development properties and land, “with an aggregate gross asset value of $2.3 billion,” according to the company. As of Q4 2015, HIT listed total assets of $2.27 billion on its books. Based on its total number of 86.68 million shares outstanding as of February 29, 2016, Healthcare Trust’s latest net asset value per share of $22.27 would imply a total net asset value of $1.93 billion. HTI is advised,  and directly or indirectly owned and controlled by AR Capital LLC, AR GlobalHealthcare Trust Advisors LLC, and AR Global Investments LLC. New York-based powerhouse AR Capital, formerly operating as American Realty Capital, was co-founded in 2006 by Nicholas S. Schorsch and William M. Kahane. AR Global Investments LLC operates as a subsidiary of AR Capital LLC, a full service investment management firm providing advisory services to retail and institutional investors. AR Capital’s AR Global is one of the largest alternative asset managers in the world, with over $18 billion of real estate and loans under management. AR Global’s investment programs include net leased properties in the U.S. and Europe, and domestic strategies focused on healthcare real estate, hotels, retail shopping centers, and New York City office buildings, as well as both real estate loans and corporate credit. On November 9, 2015, private equity giant Apollo Global Management, LLC (NYSE: APO) and AR Capital, LLC announced that they have mutually agreed to terminate a planned transaction pursuant to which Apollo would have purchased for $378 million a controlling interest in newly formed AR Global Investments LLC, owning a majority of AR Capital’s asset management business. A week later, on November 16, 2015, AR Capital announced the suspension and acceptance of new subscriptions to certain of its current investment programs effective December 31, 2015, “as a result of regulatory and market uncertainty.” “Until there is greater clarity, we have decided to sit this one out,” said Kahane at the time, adding, “we do not intend to register any new product offerings nor pursue any of our existing offerings after December 31, 2015. Naturally, as the government’s position becomes clearer, we may reconsider our present posture on these issues.” AR Capital’s decision came within days after the state of Massachusetts charged Realty Capital Securities (RCS) with fraudulently securing proxy votes to support real estate deals sponsored by AR Capital, which is owned by Schorsch and Kahane. Photo: Nicholas “Nick” Schorsch, Chairman, CEO and Co-Founder of AR Capital, formerly American Realty Capital.]]>

Ticking Clock: Emerson Radio Considering Strategic Alternatives, New Business Model

Ticking Clock: Emerson Radio Considering Strategic Alternatives, New Business Model

Emerson Radio Corp. (NYSE MKT: MSN) is analyzing strategic alternatives, including a potential transition in the company’s business model and potential strategic acquisitions related to such transition, and will retain a financial advisor to assist in its evaluation, the company said in a filing. As of March 29, 2016, Emerson Radio had a market capitalization of $23.87 million, and an enterprise value of -$20.27 million, based on data provided by Capital IQ. Emerson Radio is highly dependent upon sales of its products to Target and Wal-Mart. For the fiscal years ended March 31, 2015 and 2014, Target accounted for approximately 51% and 58%, respectively, of the company’s net revenues, and Wal-Mart accounted for approximately 28% and 22% of the company’s net revenues, respectively. No other customer accounted for more than 10% of the company’s net revenues during these periods, according to the company’s 10-Q filing on February 16, 2016. Emerson disclosed that “one of its key customers decided to discontinue retailing in its stores the Emerson-branded microwave oven and compact refrigeration products.” The name of the key customer has not been disclosed. In addition, Funai Corporation, Inc. provided a notice to terminate its License Agreement with the company effective December 31, 2016. In 2001, Emerson exited the video electronics business (TVs, DVD players, VCRs) and handed 100% of the manufacturing operations to Funai, which continued to make and market Emerson consumer video products for Wal-Mart. Funai Corporation is the North American sales and marketing subsidiary of consumer electronic products manufacturer Funai Electric Co.Ltd., of Japan. The company said it is analyzing the impact of these events to its business and is identifying strategic courses of action for consideration, including seeking new licensing relationships. To this end, the company has entered into a short-term consulting agreement with a company that focuses on strategic brand extensions to assist the company in development of a business plan to enhance its licensing and brand strategy. In addition, after considering the impact of these events on the company’s revenue, and in an effort to align its cost structure to anticipated future revenue levels, the company’s board of directors approved a workforce reduction plan, which will result in a reduction of approximately 23% of the company’s worldwide workforce. Emerson Radio Corp., founded in 1948 and previously known as Emerson Phonograph Co. until 1977, is one of the nation’s largest volume consumer electronics distributors with a recognized trademark in continuous use since 1912. It continues to be one of the oldest and well-respected names in the consumer electronics industry. The company offers its products primarily under the Emerson brand name; and licenses its trademarks to others on a worldwide basis for various products. Emerson Radio Corp. markets its products primarily through mass merchandisers. The company is headquartered in Hackensack, New Jersey. Emerson Radio designs, sources, imports, markets, and sells various houseware and consumer electronic products in the United States and internationally. It provides houseware products, such as microwave ovens and compact refrigerators; audio products, including clock radios and portable audio products; and other products comprising televisions, mobile and landline telephones and accessories, tablet computers and accessories, cameras and video cameras and accessories, and miscellaneous electronic and novelty products. On May 31, 2011, the High Court of Hong Kong appointed Fok Hei Yu (also known as Vincent Fok), formerly a director and chairman of the company, and Roderick John Sutton, both of FTI Consulting (Hong Kong) Limited, as Joint and Several Provisional Liquidators over Grande Holdings Limited (In Liquidation), which indirectly has the power to vote and direct the disposition of 15,243,283 shares, or approximately 56.2%, of the outstanding common stock of Emerson. Grande is now said to be implementing a resumption plan pursuant to which Christopher Ho, who served as the Emerson’s chairman until November 2013, and his associates would continue to have a majority interest in Grande and would regain the power to direct the voting and disposition of the 15,243,283 shares beneficially owned by Grande. On March 9, 2016, Grande issued a notice of a special meeting of its stockholders to be held on April 1, 2016, to among other things, approve the resumption proposal and elect directors, including Duncan Hon, who is currently CEO of Emerson and is proposed to be appointed as an executive director of Grande. According to the circular dated March 9, 2016 published by Grande, if all the requisite approvals are obtained in a timely fashion, the resumption plan is expected to be completed on or before May 11, 2016.]]>