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(State
or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
i2398 East Camelback Road, 4th Floor
iPhoenix,
iArizona
i85016
(Address
of principal executive offices)
(Zip Code)
i(602)
i778-8700
(Registrant’s telephone number,
including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
i☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
i☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
i☐ Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
i☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title
of Each Class
Trading Symbol
Name of each exchange on which registered
None
None
None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company i☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Item
1.01
Entry into a Material Definitive Agreement.
On iMay 20, 2021 (the “Closing Date”), CMFT RE Lending RF Sub WF, LLC (the “Seller”), an indirect wholly-owned subsidiary of CIM Real Estate Finance Trust, Inc. (the “Company”), entered into a Master Repurchase Agreement (the “Repurchase Agreement”) with Wells Fargo Bank, N.A. (the “Buyer”), which provides the Seller up to $250.0 million of financing through the Buyer’s purchase of certain
eligible assets from the Seller and future advance funding to the Seller. The Repurchase Agreement provides for a simultaneous agreement by the Buyer to re-sell back to the Seller, and by the Seller to repurchase, such assets at a certain future date or upon demand. The proceeds from the Repurchase Agreement will be used to finance certain commercial real estate mortgage loans originated or acquired by the Company.
Advances under the Repurchase Agreement accrue interest at per annum rates based on the one-month London Interbank Offered Rate, plus a spread to be determined on a case-by-case basis between the Seller and the Buyer (“Price Differential”). The initial maturity date of the Repurchase Agreement is May 19, 2024, with two one-year extensions at the Seller’s option, which may
be exercised upon the satisfaction of certain conditions set forth in the Repurchase Agreement.
In connection with the Repurchase Agreement, the Company (as the guarantor) entered into a guaranty with the Buyer (the “Guaranty”), under which the Company agreed to guarantee the Seller’s obligations under the Repurchase Agreement. Subject to certain exceptions, the maximum aggregate liability under the Guaranty will not exceed 25% of the then aggregate repurchase price of all purchased assets.
The initial purchase price for an asset is the product of the applicable percentage, which is up to 80% or another percentage as agreed to between the Buyer and the Seller, and the market value of the purchased asset;
provided, that the ratio expressed as a percentage of (i) the outstanding purchase price of the purchased asset and (ii) the value of the underlying mortgage property (as defined in the Repurchase Agreement) of the purchased asset may not exceed 60%.
Pursuant to the Repurchase Agreement, the repurchase price of a purchased asset will equal the sum of (i) the outstanding purchase price of such purchased asset as of such date; (ii) the accrued and unpaid Price Differential of such purchased asset; (iii) all other amounts due and payable as of such date relating to such purchased asset; (iv) all amounts payable in connection with the termination of any Interest Rate Protection Agreement (as defined in the Repurchase Agreement) with the Buyer or its affiliates as Hedge Counterparty (as defined in the Repurchase Agreement) relating to such purchased asset; and (v) any applicable Release Amount (as defined in the Repurchase Agreement)
owed for such purchased asset (without duplication of amounts already addressed).
The Repurchase Agreement and the Guaranty contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranty requires the Company to maintain certain financial covenants as of the applicable testing period, including, so long as the Second Amended and Restated Credit Agreement dated as of March 15, 2017, as modified in December 21, 2020 (“Credit Agreement”), is in effect, (i) a maximum leverage ratio of 60%, (ii) a maximum ratio of unsecured debt to unencumbered asset value of 60%, (iii) a minimum unsecured debt service coverage
ratio of 1.75 to 1.0, (iv) a maximum ratio of secured debt owned by the consolidated group to total asset value of 40%, (v) secured debt owned by the consolidated group which is recourse debt not to exceed 15% of total asset value, (vi) a minimum fixed charge coverage ration of 1.50 to 1.0, and (vii) a minimum net worth of $1.75 billion, in each case as further defined in the Credit Agreement. Following the termination of the Credit Agreement, the financial covenants require the Company to maintain, in each case as further defined in the Repurchase Agreement: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in the Guaranty; (ii) minimum consolidated net worth greater than
or equal to $1.0 billion plus (a) 75% of the equity issued by the Company following the Closing Date minus (b) the aggregate amount of any redemptions or similar transaction by the Company from the Closing Date; (iii) maximum leverage ratio of total indebtedness to total equity less than or equal to 4.00 to 1.00; and (iv) minimum interest coverage ratio of EBITDA to interest expense equal to or greater than 1.40.
The foregoing summary of the Repurchase Agreement and the Guaranty does not purport to be a complete description and is qualified in its entirety by the full text of the Repurchase Agreement and the Guaranty, which are attached hereto as Exhibit 10.1 and Exhibit
10.2, respectively, and are incorporated herein by reference.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03 in its entirety.
Item
8.01
Other Events.
Determination of Estimated Per Share NAV
Overview
Based on the recommendation from the valuation, compensation and affiliate transactions committee (the “Valuation Committee”) comprised of the independent directors of the Company, the Company’s board of directors (the “Board”) unanimously approved and established an estimated per share net asset value (“NAV”) of the Company’s common stock of $7.20 based on an estimated market value of the
Company’s assets less the estimated market value of the Company’s liabilities, divided by the total number of shares outstanding, as of March 31, 2021.
The Company is providing this updated estimated per share NAV to assist broker-dealers in meeting their customer account statement reporting obligations under Financial Industry Regulatory Authority Rule 2231. The updated estimated per share NAV will first appear on stockholder account statements for the quarter ended June 30, 2021. The Board previously determined an estimated per share NAV of the Company’s common
stock of $7.31 as of June 30, 2020. As a result of the updated estimated per share NAV as of March 31, 2021, commencing on May 26, 2021, shares of common stock will be issued in the Company’s DRIP for $7.20 per share. Additionally, commencing on May 26, 2021, the updated estimated per share NAV of $7.20 shall serve as the most recent estimated per share NAV for purposes of the Company’s share redemption program.
Process
In determining the estimated per share NAV, the Board considered information and analysis including
valuation materials that were provided by Duff & Phelps, LLC (“Duff & Phelps”), information provided by the Company’s manager, CIM Real Estate Finance Management, LLC (“CMFT Management”), and the estimated per share NAV recommendation made by the Valuation Committee. Duff & Phelps is an independent global valuation advisory and corporate finance consulting firm that specializes in providing real estate valuation services that was engaged by the Company to (1) estimate market values for any property owned as of March 31, 2021 with greater than eight years of remaining lease term using a direct capitalization approach, and (2) perform a discounted cash flow valuation for any property owned as of March 31,
2021 with fewer than eight years of remaining lease term and for all of the Company’s multi-tenant properties, as further described below. Duff & Phelps also reviewed the Company’s methodology for estimating fair market adjustments to the Company’s loans-held-for-investment and debt and determined that such methodology was reasonable.
The engagement of Duff & Phelps was approved by the Board, including all of the independent directors thereof. Duff & Phelps’ scope of work was conducted in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. Several members of the Duff &
Phelps engagement team who certified the methodologies and assumptions applied by the Company hold a Member of Appraisal Institute (“MAI”) designation. In January 2021, Duff & Phelps was engaged by the Company to provide assistance to the Board with establishing the updated estimated per share NAV of the Company as of March 31, 2021. In April 2020, Duff & Phelps was engaged by the Company to provide quarterly assistance to the Board with establishing the updated estimated per share NAV of the
Company during the period of economic disruption caused by COVID-19, including as of March 31, 2020 and June 30, 2020, as well as by Cole Credit Property Trust V, Inc. (“CCPT V”) and Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”), each of which are real estate programs sponsored by our sponsor, to assist the board of directors of those companies in determining an updated estimated per share NAV of the Company, CCPT V and CCIT III for those same periods. In September 2020, Duff & Phelps was engaged by the Company to provide assistance with 1) the purchase price allocation related to the mergers of CCIT III and CCPT V into the
Company, 2) the valuation of the Company’s condominium units acquired via foreclosure, and 3) the valuation of the Company’s commercial mortgage-backed securities. Duff & Phelps was previously engaged by the Company in July 2015, July 2016, December 2016, December 2017, December 2018 and December 2019 to assist the Board in determining the estimated per share NAV of the Company. In January 2016, Duff & Phelps was engaged by CCPT V to assist its board of directors in determining the estimated per share NAV of CCPT V, and was later re-engaged by CCPT V in December 2016, December 2017, December 2018 and December 2019
to assist its board of directors in determining an updated estimated per share NAV. Other than the engagements with CCPT V and CCIT III and the prior engagements with the Company as described herein, Duff & Phelps does not have any direct interests in any transaction with the Company or the Company’s manager or its affiliates, and has not performed any other services for the Company or the Company’s manager or its affiliates during the past two years.
The analysis provided by Duff & Phelps
included a range of NAVs of the Company’s shares, and the Board believes that the use of the “NAV Methodology,” as discussed below, as the primary or sole indicator of value has become widely accepted as a best practice in the valuation of non-listed REIT shares, and therefore the Board determined to use the NAV Methodology in establishing the estimated per share NAV. Based on these considerations, the Valuation Committee recommended and the
Board established an estimated per share NAV of the Company’s common stock, as of March 31, 2021, of $7.20 per share,
which was the approximate mid-point of the $6.88 to $7.55 per share valuation range calculated by Duff & Phelps using the NAV Methodology. The valuation was performed in accordance with the provisions of the Institute for Portfolio Alternatives Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs. The Board is ultimately and solely responsible for the establishment of the estimated per share NAV.
Valuation Methodology
In preparing its valuation materials and in reaching its conclusions as to the reasonableness of the methodologies and assumptions used by the Company to value its assets, Duff & Phelps, among other things:
•reviewed financial and operating information requested from, or provided by, the
Company, including property level cash flow projections for each of the properties and market leasing assumptions for each of the multi-tenant properties;
•researched the market by means of publications and other resources to measure current market conditions, supply and demand factors, and growth patterns and their effect on each of the subject properties;
•reviewed all other assets and liabilities of the Company, including loans-held-for-investment and mortgage debt, to determine the reasonableness of fair value of such items as of the valuation date;
•discussed the valuations and related write-ups with the relevant members of the
Company’s real estate management and transaction teams to understand the Company’s expectations and intent with respect to each of the properties; and
•performed such other analyses and studies, and considered such other factors, as Duff & Phelps considered appropriate.
In addition, to address the current risk to our portfolio due to the COVID-19 pandemic, Duff & Phelps considered potential impacts in rent growth over the next 12 months while determining the values of the Company’s real estate assets.
Duff & Phelps utilized two approaches pursuant to the NAV Methodology in valuing the
Company’s real estate assets that are commonly used in the commercial real estate industry. The following is a summary of the NAV Methodology and the valuation approaches used by Duff & Phelps.
NAV Methodology – The NAV Methodology determines the value of the Company by determining the estimated market value of the Company’s entity level assets, including real estate assets, and subtracting the market value of its entity level liabilities, including its debt. The materials provided by Duff & Phelps to estimate the value of the real estate assets were prepared using discrete estimations of “as is” market valuations for each of the properties in the
Company’s portfolio using the income capitalization approach as the primary indicator of value and the sales comparison approach as a secondary approach to value, as discussed in greater detail below. From the aggregate values of the individual properties, Duff & Phelps made adjustments to reflect balance sheet assets and liabilities. The resulting amount, which is the estimated NAV of the Company, is divided by the number of shares of common stock outstanding to determine the estimated per share NAV. Duff & Phelps also reviewed the Company’s methodology for estimating fair market adjustments to the loans-held-for-investment and debt and determined that such methodology was reasonable.
Determination of Estimated Market Value of the
Company’s Real Estate Assets Under the NAV Methodology
Income Capitalization Approach – The income capitalization approach simulates the reasoning of an investor who views the cash flows that would result from the anticipated revenue and expense on a property throughout its lifetime. The net operating income (“NOI”) developed in Duff & Phelps’ analysis is the balance of potential income remaining after vacancy, collection loss and operating expenses. This NOI was then capitalized at an appropriate rate to derive an estimate of value (the “Direct Capitalization Method”) or discounted by an appropriate yield rate over a typical projection period in a discounted cash flow analysis (the “DCF Method”). Thus, two key steps were involved: (1) estimating the NOI applicable to the subject property and (2) choosing appropriate capitalization rates and discount rates.
Duff
& Phelps utilized the Direct Capitalization Method for all of the single-tenant properties in the Company’s portfolio with more than eight years remaining on their existing leases, or whose options will likely be exercised so that the remaining term is greater than eight years, and the DCF Method for the remaining single-tenant properties as well as all of the Company’s multi-tenant properties.
The following summarizes the range of capitalization rates Duff & Phelps used to arrive at the estimated market values of the Company’s properties that were valued using the Direct Capitalization Method:
Range
Weighted-Average
Overall
Capitalization Rate
4.50% - 8.00%
6.21%
The following summarizes the range of terminal capitalization rates, discount rates and implied overall capitalization rates Duff & Phelps used to arrive at the estimated market values of the Company’s properties that were valued using the DCF Method:
Range
Weighted-Average
Terminal
Capitalization Rate
5.75% - 9.50%
7.71%
Discount Rate
6.25% - 10.75%
8.49%
Implied Overall Capitalization Rate
(3.85%) - 9.95%
6.83%
The Board believes that the assumptions employed by Duff & Phelps in the income capitalization approach are reasonable and within the ranges used for properties
that are similar to the Company’s properties and held by investors with similar expectations to the Company’s investors. However, a change in the assumptions would impact the calculation of the value of the Company’s investments in real estate. For example, assuming all other factors remain unchanged, an increase of 25 basis points in the capitalization rates determined for the properties valued using the Direct Capitalization Method, together with an increase of 25 basis points in the discount rates used for the single-tenant properties valued using the DCF Method and an increase of 50 basis points in the discount rates used for the multi-tenant properties valued using the DCF Method, would result in a decrease
of $0.32 per share from the approximate mid-point of Duff & Phelps’ valuation range, while the same basis point decrease in these rates would result in an increase of $0.35 per share from the approximate mid-point of the valuation range. Further, each of these assumptions could change by more than 25 or 50 basis points, as applicable, or not change at all.
Sales Comparison Approach – The sales comparison approach estimates value based on what other purchasers and sellers in the market have agreed to as the price for comparable improved properties. This approach is based upon the principle of substitution, which states that the limits of prices, rents, and rates tend to be set by the prevailing prices, rents, and rates of equally desirable substitutes.
Utilizing the NAV Methodology, including use of the two approaches to value the
Company’s real estate assets noted above, and dividing by the approximately 362.0 million shares of the Company’s common stock outstanding on March 31, 2021, resulted in an estimated valuation range of $6.88 to $7.55 per share, with a base value or approximate mid-point of $7.20.
Duff & Phelps prepared and provided to the Company a report containing, among other information, a range of net asset values for the Company’s common stock as of March 31, 2021 (the “Valuation Report”). On May 17, 2021, the Valuation
Committee conferred with Duff & Phelps regarding the methodologies and assumptions used in the Valuation Report, and discussed the Valuation Report and related issues with the Company’s manager. In determining a recommended per share NAV, the Valuation Committee considered the analysis provided by Duff & Phelps and the range of values Duff & Phelps determined, input from the Company’s manager regarding the nature and characteristics of the real estate assets in the portfolio, and general real estate market conditions. Based upon this information, the Valuation Committee determined to recommend to the Board an estimated per share NAV of $7.20 for its common stock, which was the approximate mid-point of the range of values determined by Duff & Phelps. On May 25,
2021, the Board unanimously approved the Valuation Committee’s recommendation.
The table below sets forth the calculation of the Company’s estimated per share NAV as of March 31, 2021 (dollars in thousands, except per share values):
(1)For
the loans held-for-investment, net balance, Duff & Phelps independently valued four senior loans, and performed a positive assurance analysis utilizing the fair value estimates provided by the Company as the estimated value for the broadly syndicated loans.
(2)For the notes payable and credit facility balance, Duff & Phelps reviewed and analyzed the debt instruments’ investment terms and performance of underlying collateral, which are supported by industry surveys of market rates. A calculation of the present value using market rates was compared with the principal balance using contractual rates. The rates are deemed at market; thus, outstanding principal balances are
considered representative of fair value.
The table below sets forth the calculation of the Company’s estimated per share NAV as of June 30, 2020 (dollars in thousands, except per share values):
(1) For the loans held-for-investment, net balance, Duff & Phelps independently valued two senior loans and a mezzanine loan, and performed a positive assurance analysis utilizing the fair value estimates provided by the Company as the estimated value for the broadly syndicated loans.
Exclusions from Estimated Per Share NAV
The estimated per share NAV recommended by the Valuation Committee and approved by the Board does not reflect any “portfolio premium,”
nor does it reflect an enterprise value of the Company, which may include a premium or discount to NAV for:
•the size of the Company’s portfolio, as some buyers may pay more for a portfolio compared to prices for individual investments;
•the overall geographic and tenant diversity of the portfolio as a whole;
•the characteristics of the Company’s working capital, leverage, credit facilities and other financial structures where some buyers may ascribe different values based on synergies, cost savings or other
attributes;
•certain third-party transaction or other expenses that would be necessary to realize the value;
•services being provided by personnel of CMFT Management under the management agreement and the Company’s potential ability to secure the services of a management team on a long-term basis; or
•the potential difference in per share NAV if the Company were to list its shares of common stock on a national securities exchange.
Limitations of the Estimated Per Share NAV
As with any valuation methodology,
the NAV Methodology used by the Board in reaching an estimate of the per share NAV of the Company’s shares is based upon a number of estimates, assumptions, judgments and opinions that may, or may not, prove to be correct. The use of different valuation methods, estimates, assumptions, judgments or opinions may have resulted in significantly different estimates of the per share NAV of the Company’s shares. In addition, the Board’s estimate of the per share NAV is not based on the book values of the Company’s real estate, as determined by generally accepted accounting principles, as the Company’s book value for most real estate
is based on the amortized cost of the property, subject to certain adjustments.
Furthermore, in reaching an estimate of the per share NAV of the Company’s shares, the Board did not include a discount for debt that may include a prepayment obligation or a provision precluding assumption of the debt by a third party. In addition, although selling costs were used by Duff & Phelps in the individual valuation of multi-tenant properties using the DCF Method, other costs that are likely to be incurred in connection with an appropriate exit strategy, whether that strategy involves a listing of the Company’s shares of common stock on a national securities exchange, a merger of the
Company, or a sale of the Company’s portfolio, were not included in the Board’s estimate of the per share NAV of the Company’s shares.
As a result, there can be no assurance that:
•stockholders will be able to realize the estimated per share NAV upon attempting to sell their shares; or
•the Company will be able to achieve, for its stockholders, the estimated per share NAV upon a listing of
the Company’s shares of common stock on a national securities exchange, a merger of the Company, or a sale of the Company’s portfolio.
The estimated value of the Company’s assets and liabilities is as of a specific date and such value is expected to fluctuate over time in response to future events, including but not limited to, changes to commercial real estate values, changes in market interest rates for real estate debt, changes in capitalization rates, rental and growth rates, changes in laws or regulations, demographic changes, returns on competing investments, changes in the amount
of distributions on the Company’s common stock, repurchases of the Company’s common stock, the proceeds obtained for any common stock or other transactions, local and national economic factors and the factors specified in Part I, Item 1A, Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A, Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
While the determination of the most
recent estimated per share NAV was conducted with the material assistance of a third-party valuation expert, with respect to asset valuations, the Company is not required to obtain asset-by-asset appraisals prepared by certified independent appraisers, nor must any appraisals conform to formats or standards promulgated by any trade organization. The Company does not intend to release individual property value estimates or any of the data supporting the estimated per share NAV.
Additional Information Regarding Engagement of Duff & Phelps
Duff & Phelps’ valuation materials were addressed solely to the Company in connection
with the approval by the Board of an estimated per share NAV of the common stock of the Company as of March 31, 2021. Duff & Phelps’ valuation materials provided to the Company do not constitute a recommendation to purchase or sell any shares of the Company’s common stock or other securities. The estimated per share NAV of the Company’s common stock may vary depending on numerous factors that generally impact the price of securities, the financial condition of the Company and the state of
the real estate industry more generally, such as changes in economic or market conditions, changes in interest rates, changes in the supply of and demand for commercial real estate properties and changes in tenants’ financial condition.
In connection with its review, while Duff & Phelps reviewed the information supplied or otherwise made available to it by the Company for reasonableness, Duff & Phelps assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party, and did not undertake any duty or responsibility to verify independently any of such information. With respect to financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Duff & Phelps, Duff & Phelps assumed that such
forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of the Company, and relied upon the Company to advise Duff & Phelps promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.
In preparing its valuation materials, Duff & Phelps did not, and was not requested to, solicit third party indications of interest for the Company in connection with possible purchases of the Company’s securities or
the acquisition of all or any part of the Company.
In performing its analyses, Duff & Phelps made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond Duff & Phelps’ control and the control of the Company. The analyses performed by Duff & Phelps are not necessarily indicative of actual values, trading values or actual future results of the Company’s common stock that might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. The analyses do not reflect the prices at which properties may actually be sold,
and such estimates are inherently subject to uncertainty. As stated above, the Board considered other factors in establishing the estimated per share NAV of the Company’s common stock in addition to the materials prepared by Duff & Phelps. Consequently, the analyses contained in the Duff & Phelps materials should not be viewed as being determinative of the Board’s estimate of the per share NAV of the Company’s common stock.
Duff & Phelps’ materials were necessarily based upon market, economic, financial and other circumstances and conditions existing at March 31, 2021, and any material change in such circumstances and conditions may have affected Duff & Phelps’ analysis, but Duff & Phelps
does not have, and has disclaimed, any obligation to update, revise or reaffirm its materials as of any date subsequent to March 31, 2021.
For services rendered in connection with and upon the delivery of its valuation materials, the Company paid Duff & Phelps a customary fee. The compensation Duff & Phelps received was based on the scope of work and was not contingent on an action or event resulting from analyses, opinions, or conclusions in its valuation materials or from its use. In addition, Duff &
Phelps’ compensation for completing the valuation was not contingent upon the development or
reporting of a predetermined value or direction in value that favors the Company, the amount of the estimated value, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the valuation materials. The Company also agreed to reimburse Duff & Phelps for its expenses incurred in connection with its services, and will indemnify Duff & Phelps against certain liabilities arising out of its engagement.
Distribution Reinvestment Plan
Pursuant to the terms of the Company’s DRIP currently in effect, distributions will be reinvested in shares of the
Company’s common stock at a price equal to the most recently disclosed estimated per share NAV, as determined by the Board, less the aggregate distributions per share of any net sale proceeds from the sale of one or more of the Company’s assets or other special distributions so designated by the Board. Accordingly, commencing on May 26, 2021, shares of the Company’s common stock issued pursuant to the DRIP will be issued for $7.20 per share, until such time as the Board determines a new estimated per share NAV.
A participant may terminate participation in the DRIP at any time by delivering a written notice to the administrator. To be effective for any monthly distribution, such termination notice must
be received by the administrator at least 10 days prior to the last day of the month to which the distribution relates. Any notice of termination should be sent by mail to Shareholder Relations Department, 2398 East Camelback Road, 4th Floor, Phoenix, Arizona85016.
Stockholders who presently participate in the DRIP do not need to take any action to continue their participation in the DRIP.
Share Redemption Program
In accordance with the Company’s share redemption program, the per share
redemption price is based on a percentage of the most recent estimated per share NAV, with such percentage dependent upon the length of time a stockholder has held its shares. As a result of the Board’s determination of an estimated per share NAV of the Company’s shares of common stock, commencing on May 26, 2021, the estimated per share NAV of $7.20 will serve as the most recent estimated per share NAV for purposes of the share redemption program, until such time as the Board determines a new estimated per share NAV.
Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, the methodology and assumptions used in determining the most recent estimated per share NAV of the Company’s common stock. Duff & Phelps relied on forward-looking information, some of which was provided by or on behalf of the Company, in preparing its valuation materials. Therefore, neither such statements nor Duff & Phelps’ valuation materials are intended to, nor shall they, serve as a guarantee of the Company’s performance in future periods. You can identify these forward-looking statements by the use of words such as “believes,”“potential,”“may,”“will,”“should,”“intends,”“estimates,”“anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021, filed with the SEC. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Current Report
on Form 8-K and in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Actual events may cause the value and returns on the Company’s investments to be less than that used for purposes of the Company’s estimated per share NAV.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
