REAL ESTATE INVESTMENT
CIM Group | September 23, 2021
CIM Real Estate Finance Trust, Inc. announced it has entered into a definitive merger agreement to acquire CIM Income NAV, Inc. in a stock-for-stock, tax-free merger transaction. CMFT and INAV are non-traded REITs managed by affiliates of CIM Group, LLC (“CIM”).
The pro forma combined company would have approximately $6.0 billion in total enterprise value, creating a leading commercial credit-focused real estate investment trust (REIT) with greater tenant, industry, and asset type diversity, financial strength, and improved access to capital markets. This transaction is expected to close in the fourth quarter of 2021, subject to certain closing conditions, including INAV stockholder approval.
The merger agreement was negotiated on behalf of CMFT and INAV by their special committees composed exclusively of disinterested independent directors. Each special committee recommended approval of the merger agreement to its respective Board of Directors. Each respective Board of Directors subsequently unanimously approved the entry by its REIT into the merger agreement.
We believe combining INAV and CMFT will benefit stockholders of both companies by creating a larger, more diversified and valuable company, positioning the company for a public market listing.
- Richard Ressler, Principal and Co-Founder of CIM Group.
Potential Strategic Benefits
The merger is expected to produce meaningful benefits for stockholders of CMFT and INAV, including:
Greater Scale & Relevance: With $6.0 billion and $3.2 billion1 in enterprise value and equity value, respectively, CC CMFT will be one of the largest credit-focused REITs, increasing its relevance in the capital markets and reducing its cost of debt and equity capital.
Diversification: CC CMFT's combined 590 property, 23.8-million-square-foot real estate portfolio will have greater tenant, industry and asset type diversity, providing CC CMFT with greater flexibility to opportunistically pursue growth strategies and recycle non-core assets. CC CMFT’s top five tenant concentration decreases from 22% at both CMFT and INAV to 19%, with no single tenant concentration above 5%.
Path to Liquidity: The merger transaction is one more step in the execution of CMFT’s business plan and is anticipated to better position CC CMFT for a public market listing, which, subject to market conditions, is expected to occur in 2022.2
Cost Savings: CC CMFT is expected to realize $2.8 million of annualized general and administrative synergies on a run-rate basis with additional cash flow improvement of $2.5 million to INAV stockholders through the elimination of ongoing stockholder servicing fees.
Subject to the terms and conditions of the merger agreement, INAV stockholders would receive an approximate 10.6% premium3 for each share of INAV common stock based upon the receipt of the following consideration:
Class D: 2.574 shares of CMFT common stock, which is valued at approximately $18.53 per share
Class T: 2.510 shares of CMFT common stock, which is valued at approximately $18.07 per share
Class S: 2.508 shares of CMFT common stock, which is valued at approximately $18.06 per share
Class I: 2.622 shares of CMFT common stock, which is valued at approximately $18.88 per share
Additionally, CMFT intends to increase its distribution rate, subject to approval by the CMFT Board of Directors, so that INAV stockholders will receive aggregate per annum distributions in an amount equal to or greater than INAV’s current annualized distributions after the closing of the proposed merger.
RBC Capital Markets, LLC is acting as financial advisor to the Special Committee of the Board of Directors of CMFT, and Sullivan & Cromwell LLP and Venable LLP are acting as legal advisors to the Special Committee of the Board of Directors of CMFT. Morris, Manning & Martin, LLP is acting as REIT and securities counsel in connection with the transaction. The Special Committee of the Board of Directors of INAV has engaged Jones Lang LaSalle Securities, LLC, an affiliate of Jones Lang LaSalle America, Inc. as their financial advisor, and Nelson Mullins Riley & Scarborough LLP as their legal advisor.
About CIM Real Estate Finance Trust, Inc.
CMFT is a public non-traded corporation that has elected to be taxed and currently qualifies as a REIT. CMFT holds investments in net lease and multi-tenant retail assets as well as real estate loans and other credit investments. CMFT is managed by affiliates of CIM.
About CIM Income NAV, Inc.
INAV is a public, non-traded corporation that has elected to be taxed and currently qualifies as a REIT. INAV holds investments in office, industrial and retail assets. INAV is managed by affiliates of CIM.
About CIM Group
CIM is a community-focused real estate and infrastructure owner, operator, lender and developer. Since 1994, CIM has sought to create value in projects and positively impact the lives of people in communities across the Americas by delivering more than $60 billion of essential real estate and infrastructure projects. CIM’s diverse team of experts applies its broad knowledge and disciplined approach through hands-on management of real assets from due diligence to operations through disposition. CIM strives to make a meaningful difference in the world by executing key environmental, social and governance (ESG) initiatives and enhancing each community in which it invests.
REAL ESTATE INVESTMENT
Gray Capital | June 30, 2022
Multifamily investment firm Gray Capital has closed on their acquisition of Club Meridian Apartments, a 406-unit property located in Okemos, MI just east of Lansing, MI.
Gray Capital intends to make strategic upgrades at the property, including siding and asphalt repairs, pool upgrades, re-painted balconies, new signage, and other exterior enhancements to boost the curb appeal of the property. Additionally, interior renovations like modern appliances, new flooring, and upgraded countertops will significantly increase the value of the asset and elevate its position in the rental market.
Club Meridian is already a well-maintained property, and this solid foundation will allow us to dedicate our resources to those renovations and improvements that are most important to residents and the quality of the property itself."
Spencer Gray, President and CEO of Gray Capital
George Tikijian, Hannah Ott, and Cameron Benz of the Indianapolis Cushman & Wakefield represented the seller in the transaction, with Gray Capital representing itself.
Club Meridian is the second property within Gray Capital's $100 million multifamily investment fund, The Gray Fund, and follows the acquisition of Indianapolis apartment property Stonybrook Commons one month prior.
The acquisition of Club Meridian and Stonybrook Commons in 2022 adds to Gray Capital's $600+ million in assets under management and more than $1 billion in commercial real estate projects to date since its founding in 2015.
REAL ESTATE INVESTMENT
Archer | August 23, 2021
Archer has unveiled AIM Automated Underwriting, a data-driven underwriting tool that significantly enhances the multifamily underwriting process and reduces the amount of time required to complete a first underwriting from days to minutes.
AIM Automated Underwriting solves one of biggest challenges that real estate investors face today – evaluating and underwriting deals efficiently and effectively. With AIM Automated Underwriting, investors can complete a first underwriting of any multifamily property in less than 15 minutes.
"Quality underwriting is crucial to the successful execution of an investment strategy, but speed also matters because investors that act quickly have an advantage over their competitors," says Thomas Foley, co-founder and CEO of Archer. "Before AIM Automated Underwriting, investors had to choose between speed and quality. AIM Automated Underwriting gives investors all the information they need to estimate expected returns, mitigate known risks, and take advantage of upside potential."
AIM Automated Underwriting supports Archer's mission to make real estate investing easier through better data, technology, and local expertise. The tool is an extension of AIM, Archer's proprietary technology platform, which helps investors source opportunities by converting raw, disjointed data into actionable market intelligence with a click of a button.
"Real estate investors today are overwhelmed and stretched," says Fred Canney, co-founder, COO, and CFO of Archer. "Their teams are trying to do more with less and are constantly looking for ways to differentiate their capabilities. AIM Automated Underwriting not only vastly improves the quality of each underwritten model, it also gives back the most valuable commodity of all: time."
By leveraging machine learning, AIM Automated Underwriting predicts operating costs, identifies the best comps in the market for revenues or sales, and automatically sorts through thousands of comparable properties to select only the best. It then organizes the information in a useful and intuitive way through a user interface that helps real estate acquisitions teams quickly apply their expertise to adjust the base level assumptions as needed.
AIM Automated Underwriting provides:
Speed to the first underwrite – 15 minutes or less for a full multifamily evaluation, with or without a rent roll or T-12
Transparency in decision making – see all rent, operating costs, and sales comps; understand why each comp was chosen, and importantly, which comps were not chosen and why
Expansion of scope – with an automated underwriting model, investors can look at more deals than before, prioritize deals faster, and choose where to spend their time
"I can't imagine going back to the old way of underwriting," says Miles Pratt, managing director of acquisitions for Archer. "Being able to confidently underwrite dozens of properties in several different markets in a fraction of the time is a real game-changer. Though human-level refinement is still necessary for perfecting underwriting, the speed that you can get to the refinement part of the analysis is a huge leap in productivity."
AIM Automated Underwriting effectively produces a baseline underwriting complete with comparable analysis and all the information necessary for investors to make smart, informed decisions.
"At Archer, we know that data is only the start of the equation – real estate professionals bring a tremendous amount of market knowledge and acquisitions expertise," Canney says. "We believe AIM Automated Underwriting helps prioritize effort, focuses human energy where it can add the most value, and allows investors to pursue more deals with the teams they have today."
Q&A: Archer's Canney Explains the Ins & Outs of AIM Automated Underwriting
AIM Automated Underwriting is just one of Archer's unique technology tools. The company's talented data science team recently developed a recommendation engine to help investors expand from their local market into "look-alike" markets where they have a less of a presence.
The powerful recommendation engine analyzes new markets at scale that would traditionally require an army of analysts. Learn more about Archer's recommendation engine.
Since launching the platform in March 2021, Archer has grown its real estate clients to more than a dozen funds and operators who are sourcing off-market opportunities in more than 25 markets.
For example, Archer has partnered with a Houston-based private equity firm to expand its market entry to Austin and San Antonio. It's also working with an investor with very specific investment criteria to identify pockets of opportunity within San Diego and Salt Lake City.
Archer is a real estate investment firm that helps investors build their ideal portfolios. By targeting specific cities and properties, Archer is transforming the way investors enter new markets and expand into new property types. The firm has developed a transformative technology tool, Actionable Insights Model (AIM), that merges data from trusted sources and insights from local market experts. Guided by AIM, Archer identifies the most strategic assets, allowing investors to reduce the risk associated with market entry.