Carter Validus merging to create $3 billion real estate firm

There will be one less commercial real estate investment firm based in the Tampa area by the close of this year, if a planned merger between Carter Validus Mission Critical REIT and Carter Validus Mission Critical REIT II reaches fruition.

The two firms, both non-traded but public real estate investment trusts that focus on acquiring data centers and health care properties nationwide, announced in mid-April that they had signed a “definitive agreement” to merge through a stock and cash transaction sometime in the second half of 2019, pending approval by shareholders. Both companies are controlled by the same leadership.

Together, the new firm will be valued in excess of $3 billion and own roughly 150 properties containing 8.4 million square feet, according to data from the two companies’ websites that was current as of March.

The corporate marriage also is expected to benefit shareholders of both companies, a top Carter Validus official says in a statement.

“We expect that the combined company will benefit from increased size and scale, further diversification of tenancy and geography and the continued guidance of its seasoned management team, culminating in expanded potential liquidity options and resulting value to stockholders,” says Michael A. Seton, the president and CEO of both companies, who took over the top role in April 2018 from John E. Carter, who in turn became chairman.

Although it was “declared effective” by the U.S. Securities & Exchange Commission in May 2014, roughly four years after its predecessor, Carter Validus Mission Critical REIT II has surpassed Carter Validus Mission Critical REIT in size and asset base, their websites indicate.

Carter Validus in March had an average portfolio occupancy of 91.6%, whereas Carter Validus Mission Critical REIT II’s average occupancy at that time was 97.6% — despite a significantly larger portfolio of properties, at 85 vs. 61.

Carter Validus Mission Critical REIT II’s portfolio also is more than twice the size of that of Carter Validus Mission Critical REIT.

As a result, Carter Validus I shareholders will receive $1 and .4681 shares of Carter Validus Mission Critical REIT II Class A common stock through the merger, under terms announced April 12.

Carter Validus I stockholders would own roughly 39% of the successor company, and Carter Validus Mission Critical REIT II shareholders would control 61% of the combined firm on a fully diluted basis, the companies say.