TORONTO, — Vision Capital Corporation, on behalf of various investment funds it advises (“Vision”), today commented on the ongoing exclusive negotiations between Pure Multi-Family REIT LP (“Pure”) and an unnamed third party in relation to a potential transaction as well as the recent proposal by American Landmark/Electra America (“ALEA”) to acquire 100% of the outstanding Class A Units (“Units”) of Pure for an all-cash price per Unit of US$7.61. Vision has been contacted by a number of institutional and retail unitholders of Pure who have expressed their concerns with respect to the lack of response by the Board of Directors of Pure’s general partner (the “Board”) to ALEA’s proposal and believes the views of these unitholders are consistent with those of Vision set out herein (Vision and these unitholders are referred to collectively as the “Concerned Unitholders”).
As of the date of this press release, based on the listing of Pure’s largest unitholders as reported by Bloomberg, Vision believes that it is the single largest unitholder of Pure.
The Concerned Unitholders believe that the ALEA proposal represents a compelling opportunity for Unitholders to exit their investment in Pure at an attractive price. ALEA has indicated that its proposal is not subject to financing, it requires limited due diligence and is prepared to immediately enter into non-exclusive negotiations with Pure. ALEA has also submitted a proposed form of definitive agreement to Pure, which ALEA indicates is based on a form that has previously been negotiated between the parties and includes a payment by ALEA of US$40 million to secure its reverse break fee obligation.
We are concerned that Pure has not yet responded to ALEA nor has it given any indication of when and whether it intends to do so. Pure has stated that prior to receiving the ALEA proposal on June 18th, 2019, it had entered into a letter of intent with an unnamed arm’s length third party pursuant to which it agreed to engage in exclusive negotiations for an unspecified length of time with respect to a potential transaction involving Pure. We would note that in its press release of June 26th, 2019 Pure stated that the “letter of intent permits either party to terminate discussions at any time.” These exclusive negotiations have now lasted for nearly one month (or more), which is a long time for Pure to have precluded itself from pursuing other alternatives, particularly in consideration of the fact that another genuine and attractive all-cash premium offer has been presented to it.
Given the price and terms of the ALEA proposal, the Concerned Unitholders believe that the fiduciary duties of the Board require it to seriously consider the ALEA proposal and conduct its current negotiations with the unnamed third party in a way that allows Pure to engage with ALEA and accept the ALEA proposal if it is the best available alternative. ALEA appears to be a very experienced and capable acquiror. It currently owns and manages approximately 28,000 multi-family apartment units valued at over US$4 billion. The principals of ALEA have worked in both the private and public sectors of multi-family real estate and we understand have acquired over US$1 billion of U.S. apartments so far in 2019. The Concerned Unitholders may have serious questions about whether the Board has complied with its fiduciary duties if Pure agrees to continue to extend the current exclusivity period or enters into a definitive agreement with a third party without having engaged in serious negotiations with ALEA.
In any event, and of particular significance, is that time is of the essence and the Concerned Unitholders urge the Board to act quickly in securing a transaction for the benefit of Unitholders while the opportunity to do so exists.
Vision is not currently party to any agreement or understanding with any third party or with any of the other Concerned Unitholders in relation to Pure or any potential transaction involving Pure. Should a transaction involving Pure be announced, Vision will independently evaluate such transaction to determine whether it supports the transaction and expects that the other Concerned Unitholders will do the same.
Vision, a registrant under applicable securities laws, manages the Vision Opportunity Funds (the “Vision Funds“), which are private equity funds and liquid alternative mutual funds focused on publicly-traded real estate securities. The Vision Funds focus on unique market inefficiencies that allow Vision to buy real estate more cheaply through the stock market than one can in the property market. The Vision Funds target superior risk-adjusted total returns through long and short investments.
The Vision Funds have received considerable industry recognition for their leading risk-adjusted total return performance. Since its inception in 2008, the Vision Opportunity Fund Limited Partnership, Class A Units has delivered a compound annual growth rate of approximately 13.3%.