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.
Transaction Terms
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:
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Class D: 2.574 shares of CMFT common stock, which is valued at approximately $18.53 per share
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Class T: 2.510 shares of CMFT common stock, which is valued at approximately $18.07 per share
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Class S: 2.508 shares of CMFT common stock, which is valued at approximately $18.06 per share
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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.
Advisors
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.