Maryland | 000-55435 | 46-1854011 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Emerging growth company | ☐ |
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. | ☐ |
Name of Director | For | Against | Abstain | Broker Non-Votes | ||||||||
Jonathan Kuchin | 86,909,589.65 | 2,784,263.96 | 7,172,877.58 | 17,017,796.00 | ||||||||
Randall Greene | 86,855,110.61 | 2,766,694.27 | 7,244,926.30 | 17,017,796.00 | ||||||||
Roger Pratt | 86,916,939.20 | 2,732,548.79 | 7,217,243.19 | 17,017,796.00 | ||||||||
Ronald Rayevich | 86,725,667.58 | 2,840,539.98 | 7,300,523.62 | 17,017,796.00 | ||||||||
Michael A. Seton | 86,963,443.96 | 2,748,295.83 | 7,154,991.40 | 17,017,796.00 |
For | Against | Abstain | ||
106,652,048.79 | 1,435,577.62 | 5,796,900.77 |
SILA REALTY TRUST, INC. | |||
October 22, 2020 | By: | /s/ Kay C. Neely | |
Name: | Kay C. Neely | ||
Title: | Chief Financial Officer |
(i) | The Board believes that the CMG Offer represents an opportunistic attempt by CMG to purchase the Shares at a low share price and make a profit and, as a result, deprive any Company stockholders who tender their Shares of the potential opportunity to realize the long-term value of their investment in the Company. The Board notes that because the Company is a non-exchange traded REIT, there is a limited market for the Company’s common stock, and there can be no certainty regarding the long-term value of the Company’s common stock because the value is dependent on a number of factors including: changes in economic conditions generally and the real estate market specifically, including as a result of the impact of the ongoing COVID-19 pandemic; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts; policies and guidelines applicable to real estate investment trusts; the Company’s ability to maintain tenant occupancy levels; the availability of capital and debt financing. |
(ii) | As admitted by CMG, it is making the offer “with the intention of making a profit.” CMG is a for profit business that, among other things, capitalizes on the illiquidity of shares by buying shares at what CMG believes is a discounted price in order to make a profit. The CMG Offer indicates that CMG believes that the Shares will be worth more in the future. Neither we nor any of our affiliates are in any way affiliated with CMG. CMG states that it was “motivated to establish a price low enough to anticipate making a profit on its investment, yet which might be acceptable to [the Company’s] stockholders” and acknowledges that the price of $3.52 per Share offered is below the Company’s estimated net asset value (“NAV”) of $8.65 per Share (the “Estimated Per Share NAV”). Although this does not represent the price that a stockholder could obtain in the open market, or otherwise, the price of the CMG Offer is less than half of the Company’s Estimated Per Share NAV. The current NAV was determined and announced in December 2019. The Company is in the process of preparing an updated NAV but does not have the figure available at this time. |
(iii) | The value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets, and due to other factors. In particular, the outbreak of COVID-19, together with the resulting restrictions on travel and quarantines imposed, has had a negative impact on the economy and business activity globally. The extent to which our business may be affected by COVID-19 will largely depend on future developments with respect to the continued spread and treatment of the virus, which we cannot accurately predict. Depending upon the duration of COVID-19 related restrictions and the corresponding economic slowdown, some of our tenants may seek rent deferrals or become unable to pay their rent. The number of tenants that requested rent deferrals to date, relative to the overall portfolio, is a minor share. As of August 7, 2020, the Company has cash and available liquidity of approximately $264 million, which equates to almost two times annual operating expenses and annual debt service based on our annualized six months ended June 30, 2020, results. Furthermore, we will enforce our contractual lease rights when and where appropriate to ensure that tenants who can pay rent, do pay rent. However, if tenants default on their rent and vacate, the ability to re-lease this space is likely to be more difficult if the economic slowdown continues. Any long-term impact of this situation, even after an economic rebound, remains unclear. These risks are not reflected in our current Estimated Per Share NAV. |
(iv) | The Securities and Exchange Commission (the “SEC”) has recommended “extreme caution” to investors with respect to the heightened risks involved with offers such as the CMG Offer. In addition to this letter, we strongly encourage you to read the information provided by the SEC, here (www.sec.gov/investor/pubs/minitend.htm) and here (www.sec.gov/rules/interp/34-43069.htm). The SEC makes the following admonitions: |
• | If the offer is for less than 5% of a company’s shares, it is a “mini-tender offer” and “you should proceed with caution.” The CMG Offer is for, at maximum, less than 1% of our shares. Thus, they are mini-tender offers, and you should proceed with caution. |
• | “Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard.” |
• | “[I]nvestors typically feel pressured to tender their shares quickly without having solid information about the offer or the people behind it.” |
• | “[M]ini-tender offers typically do not provide the same disclosure and procedural protections that larger, traditional tender offers provide.” We believe the materials provided along with the CMG Offer fail to adequately address certain matters, such as: a complete description of the risks associated with the CMG Offer; a clear discussion of the methodologies used by CMG to determine the price of the offer or how it has valued the Company’s shares; and completeness of disclosure as to the identity of CMG, its control persons and promoters and their financial wherewithal. |
(v) | There is no guarantee that the CMG Offer can or will be completed as soon as CMG contemplates in its offer. The CMG Offer does not initially expire until November 18, 2020, and this date may be extended by CMG, subject to compliance with applicable securities laws, in its sole discretion. CMG expressly reserves the right to amend the terms of the CMG Offer, including by decreasing the $3.52 per Share offer price or by changing the number of Shares being sought or the type of consideration, at any time before the CMG Offer expires. |
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