Q: Hi, Northview Fund (NHF.UN) is doing a recapitalization transaction where the portfolio is being acquired and becoming a $2.7 billion tradional multi family REIT. The deemed transaction price is $15.06 and the stock has been drifting lower, I get that this can be sector specific, but this is not a well followed company, I am wondering if am I missing something on this transaction and why would this be drifting to the $7's. There is a share consolidation coming but I believe it is post transaction.
5i Research Answer:
A few points. The consolidation (1.75 to 1) will occur as the transaction closes, not after. (2) The $15.06 value is the accounting price deemed for the acquisitions only, not a value that shareholders receive, and will also be consolidated for the sellers of the assets upon closing. 3) The distribution post-consolidation will decline fairly significantly, to a yield close to 7%.