Northview Fund issued a press release June 12 announcing a recapitalization event and conversion to a traditional REIT (Northview Residential REIT NRR-UN).
There was lots of information to un-pack from the news release, however I am confused by the statement regarding future distributions once the recapitalization occurs:
In anticipation of the completion of the Transaction and the conversion of the Fund into a more traditional real estate investment trust, it is the Fund's intention to commence paying a distribution of $0.625 per Class A Unit per annum, or $1.09375 per Unit per annum after giving effect to the Consolidation
Based on the above, the current holders of NFH-UN would receive $0.625 per annum per unit (i.e. approximately 7.18 % based on current $8.70 unit price).
Questions
1 - Is my interpretation of the proposed distribution correct?
2 - Is it better to wait a while until all the applicable documents are available on SEDAR and can be reviewed prior to purchasing units?
2 - General opinion of this recapitalization
Ironic this entity has gone full circle in the last four years (Northview Apartment REIT, Northview Fund and now Northview Residential REIT). Lots of fees for investment bankers and lawyers.
Thank you
1) yes this looks right; 2) This is debatable but 'probably not'. As a small fund the conversion and yield should create more investor interest. With its acquisition it becomes significantly large and should attract more institutional interest. So if one is interested we think early is better than later. 3) With the (current) size and risk caveats in mind, we think it makes sense. Closed-end funds are really not great investment vehicles, and the REIT structure simply makes a lot more sense. With its soon-to-be-larger size it should get a better valuation. The selling vendors could still sell their stock and pressure units down the road, and this is not a 'magic bullet' but just simply makes sense to us to try and improve long term valuation.