WEST PALM BEACH, Fla.,
Nov. 2, 2021 /PRNewswire/
-- Elliott Investment Management L.P. ("Elliott"), in its
capacity as one of Healthcare Trust of America's (NYSE: HTA) ("HTA"
or the "Company") largest investors, today sent a letter to the
Company's Board citing broad shareholder and analyst support for a
sale process and calling on HTA to address on its third-quarter
earnings call certain questions regarding the Board's efforts to
sell the Company.
According to Elliott, HTA shareholders believe that HTA should
conduct a strategic review and publicly communicate its efforts
around a sale process. "Once commenced," Elliott wrote, "this
process must be thorough and pursued with urgency to take advantage
of the favorable market environment, and to evaluate bids from the
full universe of potential buyers."
Elliott also called on the Company's Board to provide clarity as
part of its upcoming earnings call regarding the mandate of its
financial advisor and legal counsel, in order to be transparent
with shareholders and demonstrate that the Board is acting in their
best interests.
The letter can be downloaded at RestoringTheTrust.com.
Full text of the letter follows:
November 2, 2021
The Board of Directors
Healthcare Trust of America, Inc.
16435 N. Scottsdale Road, Suite 320
Scottsdale, AZ 85254
Attn: Chairman Bradley Blair II
Attn: Interim Chief Executive Officer Peter
Foss
Dear Mr. Blair, Mr. Foss, and Members of the Board:
We write to you on behalf of Elliott Investment Management L.P.
and affiliates (together "Elliott" or "we"). Elliott has a
substantial investment in Healthcare Trust of America, Inc. ("HTA"
or the "Company"), making us one of HTA's largest investors.
We are writing to share publicly the feedback that we have
received following the release of our October 11 letter to the Board — feedback we have
shared privately with you — and to request more clarity regarding
the Board's process for evaluating strategic alternatives,
including the active solicitation of bids for the Company. The
Company's upcoming third-quarter earnings call presents a natural
opportunity to announce a formal process, clarify the mandate of
the Company's previously announced financial advisor and legal
counsel, and demonstrate that the Board is acting in good faith and
being responsive to what shareholders clearly want. On that call,
the Board must be prepared to answer the following key
questions:
- Is the Company currently conducting a robust strategic review
process, including the active solicitation of bids for the
Company? If not, why not?
- What are the mandates of the Company's previously announced
financial and legal advisors? Do these mandates include a sale
process involving the active solicitation of bids for the
Company?
Since the news of our involvement became public, we have
received numerous inbounds from other large shareholders. In those
discussions, other holders have been strong and uniform in
expressing the view that the best course of action would be for the
Company to immediately announce a formal, public strategic review,
including the solicitation of bids. In our conversations, investors
have expressed their strong agreement that a public process is
necessary to ensure that the Company can evaluate bids from the
full universe of buyers and that the process will be comprehensive
and thorough.
The feedback we received echoes the results of our shareholder
survey of over half the Company's shareholder base, which showed
unanimous support for a strategic transaction completed at a
share-price premium in line with premiums in recent REIT M&A
transactions, and the preference for a sale over a go-it-alone
strategy. Shareholders are in agreement that, even if the
Company were able to source and execute a handful of modestly
accretive acquisitions in the near-term, a sale at a premium today
represents a far more attractive risk-adjusted outcome than a
go-it-alone strategy.
Following the news of our involvement, research analysts, market
participants and other holders took the unusual step of publicly
stating their belief that HTA is undervalued in the public markets
and that the Board should explore a sale:
"In talking to our industry
contacts, MOBs have continued to attract new
investors, including a greater number of traditional
well-capitalized private equity players (e.g., KKR and Blackstone)
… With Elliott now officially going public on its position,
we see an increasing likelihood of a sale by HTA's Board,
which we believe will eventually start a strategic review, with
private equity the most likely buyer."
– Juan Sanabria, BMO Capital Markets, 10/15/21
"We believe that HTA should
… entertain strategic alternatives …"
– Michael Bilerman, Citi, 10/6/21
"Seems like an asset … that
should be sold …"
– Dan
Stratemeier, Jefferies, 10/11/21
"An HTA sale could give
investors a double win. The overall competitive landscape
has changed dramatically for HTA since its inception in 2006 …
Private giants like Blackstone and Starwood Capital Management have
raised huge funds and are encroaching on REITs' turfs
— stealing both investors and assets, pushing up prices and
making growth for companies like HTA very expensive."
– Robert Cryan, Breakingviews,
10/14/21
"V3 Capital Management LP, a
top Healthcare Trust of America Inc. investor, believes a
sale of the real estate investment trust is in the best interests
of all shareholders, according to a person with knowledge of the
matter … New
York-based V3 supports efforts by activist
investor Elliott Investment Management …"
–
Bloomberg Report, 10/11/21
"DAVID
FABER: [Elliott] said, basically what we told you they were
going to say, which is sell yourself.
JIM CRAMER: That thing has been
undervalued for ages. I totally get them.
DAVID FABER: Cost of capital
difference, there's plenty of companies out there and REITs who
want to buy you, you're trading below NAV, you don't have a
CEO."
– Squawk on the Street, 10/11/21
Note: All emphases added by
Elliott.
Analysts have also relayed in private conversations that call
volumes on HTA have risen dramatically since news of Elliott's
involvement became public. In these conversations, the analysts —
whose views reflect those of both existing and prospective
shareholders — have expressed agreement that the Board should
explore a sale of the Company given the challenging standalone
growth outlook and unusually opportune M&A environment:
"We have not received any
pushback regarding your thesis. Everyone we have spoken to seems to
be on-board."
– Research Analyst A, 10/11/21
"Completely agree with your
thesis, think the Board has to explore a sale. This is
simple … We've told him that the status quo won't work and you
should look at all alternatives and you should come out and say
that."
– Research Analyst B, 10/7/21
"Non-stop calls on HTA all
morning, a lot of interest in the Elliott/HTA story … think it
[Elliott thesis] makes a lot of sense."
– Research Analyst C, 10/8/21
"Agree with the
thesis. Competitive environment is such now that MOB
REITs can't do anything to grow."
– Research Analyst D, 10/8/21
Note: All emphases added by
Elliott.
In addition, multiple analysts have expressed the view that the
Board's lack of communication regarding the sale process has raised
concerns regarding both the Board's incentives and credibility, and
may negatively affect both the value achieved through a transaction
and the probability of a transaction materializing:
"Everyone is trying to circle in
on price and probability of the Board to accept that number.
Intentions of the Board here to do the right thing are
uncertain."
– Research Analyst E, 10/12/21
"Hopefully the Board [will]
take the right next steps, they definitely should do
so … No negative pushback on exploration of sale process, everyone
agrees there. Obviously the outcome is unknown, but [they] must run
the process … we think there's a ton of interest here and
that there's going to be bids."
– Research Analyst F,
10/11/21
"They have an obligation to
explore strategic paths, I imagine they are getting
inbounds from potential suitors … if the outcome of a strategic
review is that we're staying as a standalone company, the stock is
clearly going down not up, and they know that … The proof
will be in the proxy to ensure they ran a full
process."
– Research Analyst G,
10/12/21
"It's becoming a self-fulfilling
thing at this point, no one wants to own this here and see it go
back down … We're only a few weeks away from the earnings call and
I think there will be a lot of questions these guys need to be
prepared to answer with regards to any process that they are
running … at some point, they will need to say what they did
and what advisors did to truly maximize shareholder value and prove
that an open and transparent process was run."
–
Research Analyst H, 10/11/21
Note: All emphases added by
Elliott.
Driven by this M&A speculation, HTA's stock is now trading
at an 18% premium to the unaffected stock price prior to Mr.
Peters' resignation. If a sale of the Company does not come to
fruition, this outperformance will likely reverse, inviting further
scrutiny into the details of the Board's strategic process and
validating current shareholder skepticism.
Based upon our soundings, this skepticism is not unfounded, and
our understanding is that at least some interested parties remain
uncertain about the Board's receptivity to an attractive offer and
have not received any type of proactive outreach from the Company
regarding its exploration of strategic alternatives. Such a process
is plainly far from robust and cannot reasonably be expected to
result in a value-maximizing bid for the Company. A clear public
announcement will illustrate the Board's seriousness about the
process and commitment to achieving the best outcome for
shareholders.
As outlined in our last public letter, we think the path forward
is clear, and other shareholders, research analysts and market
commentators all agree. The sudden resignation of Mr. Peters left
HTA without long-term leadership at a time when the Company faces a
challenging future as a standalone entity. HTA's shareholders have
spoken, both publicly and privately and are in overwhelming
agreement — the Board must perform its duty and announce a
strategic review process to explore all value-maximizing
alternatives. Such an announcement would be viewed as necessary
and decisive leadership by the Board at a time when the Company's
current silence is creating destabilizing uncertainty. Once
commenced, this process must be thorough and pursued with urgency
to take advantage of the favorable market environment, and to
evaluate bids from the full universe of potential buyers.
All of HTA's stakeholders deserve clarity on the status of the
Board's efforts to explore a sale, and that clarity should be
provided at the Company's upcoming third-quarter earnings call, if
not before. We look forward to hearing the presentation, and in the
meantime we remain happy to meet with you and discuss any questions
you may have as they pertain to this letter.
Sincerely,
Dave Miller
Partner
Austin Camporin
Portfolio Manager
Tim Mackey
Portfolio Manager
Elliott Investment Management L.P. manages approximately
$48 billion of assets. Its flagship
fund, Elliott Associates, L.P., was founded in 1977, making it one
of the oldest funds under continuous management. The Elliott funds'
investors include pension plans, sovereign wealth funds,
endowments, foundations, funds-of-funds, high net worth individuals
and families, and employees of the firm.
Media
Contact:
Stephen
Spruiell
Elliott Investment Management
L.P.
(212)
478-2017
sspruiell@elliottmgmt.com
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SOURCE Elliott Management Corp