VineBrook shareholders face one-in-three proration on $30M tender priced 37% below NAV

VineBrook shareholders tendered about three times the shares the nontraded REIT's $30 million self-tender offered to buy, producing a preliminary proration factor of 33.02%. That means roughly two of every three tendered shares go unpurchased and will be returned. About 2.75 million Class A shares were tendered and not withdrawn before the offer expired at 5 p.m. ET on Oct. 5, according to a preliminary tally by depositary LODAS Transfer LLC. VineBrook expects to buy 909,090 shares at $33 each, roughly $30 million and about 3.46% of outstanding shares. Final results will come after the depositary confirms the count.

The $33 price was 62.6% of VineBrook's most recent net asset value of $52.68 a share as of June 30, a discount of about 37%. AltsWire reported the discount when the offer launched on Sept. 4. The board made no recommendation on whether stockholders should tender, and the company said none of its directors or executive officers intended to participate. In setting the price, the board said it weighed that NAV, prices at which shares changed hands through LODAS Securities LLC's market-making service, and how publicly traded single-family rental REITs American Homes 4 Rent and Invitation Homes trade relative to their estimated NAVs. VineBrook said the $33 price should not be read as the fair value of the shares.

The tender was VineBrook's first broad liquidity opportunity since December 2022, when it suspended its share repurchase plan except in cases of death, disability or similar hardship. Since then the LODAS market-making service has been stockholders' only other outlet. In the offer documents, VineBrook said its board does not intend to resume the share repurchase plan after the offer expires, subject to the same hardship exceptions.

VineBrook funded the purchase in part with a $25 million loan. Two of its subsidiaries borrowed the money from The Ohio State Life Insurance Co. at 10% annual interest, with a one-year maturity, a 1% origination fee and a 1% exit fee on prepayment, as AltsWire previously reported. VineBrook said the lender "may be deemed to be an affiliate" of its external adviser, NexPoint Real Estate Advisors V LP, through common beneficial ownership. With the loan in place, VineBrook deemed the offer's financing condition satisfied.

As this publication noted in September, the terms read less like a redemption channel than a capital raise: a fraction of old money leaves, and part of the purchase was funded with new borrowing at 10%.