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(State or other jurisdiction of incorporation)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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____________________
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_________________
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____________________
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None
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None
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None
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Exhibit No.
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Description
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Press Release, dated August 5, 2022
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Presentation Regarding GRT Strategic Update, dated August 5, 2022
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Script, dated August 5, 2022
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Questions and Answers, dated August 5, 2022
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Griffin Realty Trust, Inc.
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Date: August 5, 2022
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By:
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/s/ Javier F. Bitar
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Javier F. Bitar
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Chief Financial Officer and Treasurer
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The process involves separating the Company by spinning off a new public company and listing its shares on a national exchange, and liquidating the Company’s remaining
assets in an optimal manner.
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We will explain why the Conversion of GRT from a corporation to a trust is important to the strategic monetization process.
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And, we’ll share why we believe this process will provide our stockholders with liquidity and maximize stockholder value in a tax efficient manner.
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Next, we’ll share a high-level view of the next steps in this process.
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And finally, we’ll provide a list of various resources available to stockholders and their financial advisors should you want to access recently filed documents, or
have questions about what we are sharing today.
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Placing a curated group of primarily industrial assets, as well as certain more desirable office assets, which are generally valued more favorably by the public market
relative to our other assets, into a publicly traded vehicle that over time has the potential to trade at an attractive price, is in the best interests of our stockholders to maximize both liquidity and stockholder value.
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Additionally, given that current real estate and capital markets conditions do not support a wholesale monetization of the Company’s remaining assets at this time, we
believe that the remaining assets should be sold by GRT in the private market in the optimal manner and at the optimal time. We believe this flexibility will help the Company generate the highest return for these assets, and reduce the impact
of pandemic-related work-from-home trends, rising interest rates and economic uncertainty are currently having on valuations.
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1. |
It enables our Board to pursue the Separation in a manner that does not result in substantial adverse tax consequences for stockholders.
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It provides an added benefit of maximizing value to stockholders by eliminating future costs, risks and delays associated with the Company obtaining additional future
stockholder approvals related to the liquidation of GRT.
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1. |
What was just announced by GRT?
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A strategic monetization process
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An updated Net Asset Value (“NAV”)
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A reinstitution of share redemptions for those in connection with a stockholder death, qualifying disability or determination of incompetence or incapacitation.
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2. |
What is the Strategic Monetization Process?
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The strategic monetization process was developed by GRT management, the Board and GRT’s financial advisors (Goldman Sachs, Eastdil Secured and BofA Securities) as the
optimal way to provide stockholders with liquidity while maximizing value, all amidst the backdrop of COVID and challenging capital markets.
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The process involves a separation of GRT by spinning off a carefully curated portfolio of primarily industrial assets, as well as certain office assets, into a new
entity we are temporarily calling IndustrialCo, and immediately listing shares of IndustrialCo on a nationally recognized stock exchange.
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Upon listing, stockholders will receive shares in IndustrialCo, which will become freely tradable.
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IndustrialCo will have a separate management team and Board.
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This separation is expected to be completed by the end of 2022.
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In order to make the separation tax efficient, GRT is seeking stockholder approval to convert GRT from a Maryland corporation to a Maryland real estate investment trust
(which vote is discussed in the Proxy Statement that stockholders will receive via mail in the coming weeks)
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Remaining assets in GRT, which will primarily consist of office properties and which are generally discounted by the current public market, will be liquidated over time
in a manner deemed optimal for value maximization by GRT management and the Board.
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A prerecorded webcast presentation by GRT management explaining the strategic monetization process (as well as the updated NAV and new SRP discussed below) is available
for review on GRT’s website at grtreit.com.
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Why is GRT separating?
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The separation is driven by divergent current market demand for industrial and office properties (the former benefitting from growing e-commerce activity and the latter
challenged by pandemic-related work-from-home trends).
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We believe the separation will maximize stockholder value because it (i) will place the assets to be owned by IndustrialCo, which we believe are more favorably valued
by the market relative to our other assets, in a publicly traded vehicle, which has the potential to trade at an attractive price over time, and (ii) will enable the assets that remain with GRT to be sold in the private market at the optimal
time, which we believe will generate higher returns to stockholders than placing those assets in a publicly traded vehicle.
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Why does GRT plan to convert to a Maryland real estate investment trust?
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Converting GRT from a Maryland corporation to a Maryland real estate investment trust enables the separation to be structured in manner that is more tax efficient for
stockholders.
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For this reason, GRT management and the Board recommend a vote FOR this
conversion.
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Approval of the conversion is important because it will enable the Board to pursue the path to liquidity and value maximization that it considers to be in the best
interest of our stockholders in a manner that does not result in substantial adverse tax consequences to our stockholders. The conversion has the added benefit of maximizing value to our stockholders by eliminating future costs, risks and
delays associated with obtaining additional stockholder approvals relating to the liquidation of the Company in the future.
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In the coming weeks, stockholders will receive the Proxy Statement, which discusses this conversion proposal in greater detail and also recommends an affirmative
stockholder vote on other matters.
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When is the annual stockholder meeting?
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The date for the annual stockholder meeting will be determined following the Company’s filing of a definitive Proxy Statement and will be included in the materials that
are mailed to our stockholders.
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What is the updated Net Asset Value (NAV)?
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The updated NAV is $7.42 as of June 30, 2022
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What caused the change in the NAV?
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The NAV is lower than the last disclosed NAV of $9.10 as of June 30, 2021 primarily due to a reduction in the fair value of GRT’s office properties reflecting
continuing pandemic-related challenges and work-from-home trends, partially offset by an increase in the value of GRT’s industrial properties, which have experienced strong fundamentals primarily due to growing e-commerce and on-shoring of
supply chains.
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Given this market volatility, and our own observations as we pursue sales of properties as part of our strategic monetization plan, in determining our updated NAV we
selected the low end of the range of real estate values calculated by our independent valuation firm. Our NAV estimates may be updated more frequently than annually as a result of our future transaction activity or other significant
developments that could affect our NAV per share.
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Has GRT reinstated a Share Redemption Plan?
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Yes, concurrent with the announcement of our updated NAV, GRT adopted a Second
Amended and Restated Share Redemption Plan (“SRP”)
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Under the SRP, GRT will redeem shares in connection with a stockholder’s death, qualifying
disability or determination of incompetence or incapacitation (“DD&I”).
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New redemption requests for DD&I can be submitted now, and the first Redemption Date is September 30, 2022.
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Stockholders should visit GRT’s website to review information including a copy of the SRP as well as step-by-step instructions on how to submit redemption requests.
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Please be aware that given the change in NAV, all prior redemption requests, including those for DD&I, are no longer valid and new redemption requests must be
submitted.
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What are stockholders being asked to do?
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Stockholders will receive a Proxy Statement in the mail in the coming weeks.
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We are requesting that stockholders vote YES for a proposal to approve the
conversion of the Company from a Maryland corporation to a Maryland real estate investment trust.
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We are also asking for stockholders to vote YES on four (4) other matters as
follows:
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(i) |
the election of eight directors to serve until the 2023 annual meeting of stockholders and until their successors are duly elected and qualify,
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(ii) |
the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022,
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(iii) |
the approval, on an advisory (non-binding) basis, of the compensation paid to the Company’s named executive officers, and
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the approval of the adjournment of the annual meeting to a later date if necessary to solicit additional proxies if necessary to approve the conversion proposal.
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We are encouraging stockholders to read and understand the Proxy Statement, and submit their proxies in a timely manner. Doing so will save GRT both time and money, and
enable the Company to be more timely in the execution of the strategic monetization process.
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Where can Advisors and Investors go to get more information?
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Extensive information is available on GRT’s website at grtreit.com. There are two ways to access this information from the landing page of the website:
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Stockholders can also email our Investor Services Team at investorrelations@grtreit.com, or for operational issues call GRT’s dedicated customer service team at
800-679-2112.
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Financial Advisors can email our advisor services team at advisorservices@grtreit.com, or call Dan Ranchigoda, Vice President, Product Specialist & Advisor
Services, at 310-606-3262.
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