LOS ANGELES–(BUSINESS WIRE) – CIM Real Estate Finance Trust, Inc. (“CMFT”) announced today that it has entered into a definitive merger agreement to acquire CIM Income NAV, Inc. (“INAV”) in a tax-free, share-for-share merger. CMFT and INAV are unlisted REITs managed by affiliates of the CIM Group, LLC (“CIM”).
The combined pro forma company (“CC CMFT”) would have a total enterprise value of approximately 6.0 billion improved access to capital markets. This transaction is expected to close in the fourth quarter of 2021, subject to certain closing conditions, including approval from INAV shareholders.
The merger agreement was negotiated on behalf of CMFT and INAV by their special committees composed entirely of altruistic independent directors. Each special committee recommended that its respective board of directors approve the merger agreement. The respective Board of Directors then unanimously approved the inclusion of their REIT in the merger agreement.
“We believe the combination of INAV and CMFT will benefit shareholders of both companies by creating a larger, more diversified, more valuable company and by positioning the company for public listing,” said Richard Ressler, principal and co-founder of the CIM Group.
Potential strategic advantages
The merger is expected to bring significant benefits to shareholders of CMFT and INAV, including:
Larger scale & relevance: At $ 6.0 billion and $ 3.2 billion1 in terms of company value or equity value, CC CMFT will be one of the largest credit-oriented REITs, increase its relevance on the capital markets and reduce its debt and equity costs.
Diversification: CC CMFT’s combined 590 real estate portfolio with a 23.8 million square foot real estate portfolio will feature a greater variety of tenants, industries and assets, giving CC CMFT more flexibility to opportunistically pursue growth strategies and recycle non-core assets. The concentration of the top 5 tenants at CC CMFT drops from 22% for both CMFT and INAV to 19%, with no concentration on a single tenant above 5%.
Path to liquidity: The merger transaction is another step in the implementation of CMFT’s business plan and is intended to better position CC CMFT for a public listing that is expected to occur in 2022, subject to market conditions.2
Cost savings: CC CMFT is expected to realize $ 2.8 million in annualized general and administrative synergies on a run-rate basis with an additional $ 2.5 million cash flow improvement for INAV shareholders through the elimination of ongoing shareholder service fees.
Subject to the terms of the merger agreement, INAV shareholders would receive a premium of approximately 10.6%3 for each share of INAV common stock based on receipt of the following consideration:
- Class D: 2,574 shares of CMFT common stock valued at approximately $ 18.53 per share
- Class T: 2,510 shares of CMFT common stock valued at approximately $ 18.07 per share
- Class S: 2,508 shares of CMFT common stock valued at approximately $ 18.06 per share
- Class I: 2,622 shares of CMFT common stock valued at approximately $ 18.88 per share
In addition, subject to approval by the CMFT Board of Directors, CMFT intends to increase its payout ratio so that, upon completion of the proposed merger, INAV shareholders will receive total annual distributions equal to or greater than the current INAV annualized distributions.
CMFT and INAV have made a presentation available at www.cimgroup.com/announcements in which the highlights of the planned transaction are described.
1) Based on the most recently published NAVS of CMFT and INAV, published on March 31, 2021 and July 31, 2021, respectively. The CC CMFT Equity Value assumes a premium of 10.6%, which will be paid as consideration for all INAV shares outstanding as of July 31, 2021.
2) There is no guarantee that a listing will occur within the expected time or at all.
3) The premium is approximate based on the average conversion ratio.
RBC Capital Markets, LLC is serving as financial advisor to the Special Committee of the Board of Directors of CMFT, and Sullivan & Cromwell LLP and Venable LLP are serving as legal advisor to the Special Committee of the Board of Directors of CMFT. Morris, Manning & Martin, LLP is acting as REIT and securities advisor in connection with the transaction. INAV’s Board of Directors Special Committee has appointed Jones Lang LaSalle Securities, LLC, a subsidiary of Jones Lang LaSalle America, Inc., as financial advisor and Nelson Mullins Riley & Scarborough LLP as legal advisor.
Cautionary Statement Regarding Forward-Looking Information
This announcement contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. Statements can generally be identified as forward-looking because they contain words such as “believes,” “expects,” “expects,” “would,” “might,” or words with similar meanings. Statements that describe future plans and goals are also forward-looking statements. These statements are based on management’s current expectations of CMFT and INAV as well as currently available industry, financial and economic data. Actual results could differ materially from those expressed or implied in the forward-looking statements, which are subject to a number of risks and uncertainties, many of which are beyond the control of these companies, including, but not limited to, those relating to the risk that the proposed concentration will not take place within the expected timeframe or at all; the occurrence of an event, change or other circumstance that could result in the termination of the Merger Agreement; failure to meet the conditions for the completion of the proposed merger, including the approval of INAV’s shareholders; CC CMFT’s ability to achieve anticipated cost synergies or participate in liquidity events or public offerings; the distraction of management’s attention from ongoing business operations due to the proposed merger; the availability of suitable investment or sale opportunities; the impact of the COVID-19 pandemic on the operations and financial condition of CMFT and INAV and the real estate industries in which they operate, including in terms of occupancy, rent deferrals and the financial condition of their respective tenants; general financial and economic conditions that may be affected by government responses to the COVID-19 pandemic; Legislative and regulatory changes; and other factors, including those set out in the “Risk Factors” section of the latest CMFT and INAV annual reports on Form 10-K, as amended, and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) ) and other reports filed with the SEC by CMFT and INAV, copies of which are available on the SEC’s website at www.sec.gov. Forward-looking statements are not guarantees of performance or results and speak only as of the date these statements are made. Except as required by law, neither CMFT nor INAV undertakes any obligation to update or revise any forward-looking statements in this release, whether as a result of new information, future events, changes in assumptions or circumstances, or for any other reason.
Additional information and where to find it
In connection with the proposed merger, CMFT intends to file a registration statement on Form S-4 with the SEC that contains a proxy statement from INAV and is also a prospectus from CMFT. This announcement does not replace the registration declaration, power of attorney / prospectus or other documents made available to INAV shareholders. In connection with the proposed merger, INAV intends to file relevant materials with the SEC, including a Schedule 14A proxy statement regarding a special meeting of its shareholders. INAV SHAREHOLDERS ARE URGENTLY REQUIRED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE RELEVANT Proxy Statement, AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED COMBINATION. INAV shareholders can obtain these documents free of charge from the SEC’s website, www.sec.gov, or from the CIM Group LLC website at https://www.cimgroup.com/announcements when they become available. Such documents are currently not available.
Participant in tender
Both CMFT and INAV and their directors and officers, and certain CIM Group, LLC affiliates who act as their external advisors, may participate in the solicitation of proxies from their respective shareholders (or, in the case of CMFT, shareholders from INAV) in relation to the proposed merger between INAV and CMFT. Information regarding INAV and CMFT’s directors, officers, and outside advisors is contained in the Annual Report on Form 10-K for the year ended December 31, 2020, filed by each company with the SEC on March 31, 2021, in the as amended by INAV on April 19, 2021 and as amended by CMFT on April 27, 2021. Investors can obtain additional information about the interests of these participants by reading INAV’s proxy statement regarding its proposed merger with CMFT, when it becomes available.
No offer or solicitation
This announcement constitutes neither an offer to sell nor a solicitation of an offer to buy or sell any securities, nor a solicitation of a proxy or a vote or approval. No securities may be offered unless they are concerned a prospectus that meets the requirements of Section 10 of the Securities Act. This announcement may be viewed as solicitation material in relation to the proposed merger of INAV with CMFT.
About CIM Real Estate Finance Trust, Inc.
CMFT is a public, unlisted corporation that has opted for taxation and is currently qualifying as a REIT. CMFT has interests in net lease and multi-tenant retail real estate, as well as real estate loans and other credit investments. CMFT is managed by CIM affiliates.
About CIM Income NAV, Inc.
INAV is a public, unlisted corporation that has opted for taxation and is currently qualifying as a REIT. INAV holds stakes in office, industrial and retail properties. INAV is managed by CIM affiliates.
About the CIM group
CIM is a community based real estate and infrastructure owner, operator, lender and developer. Since 1994, CIM has sought value on projects and positively impacts the lives of people in communities across America by donating more than $ 60 billion in major real estate and infrastructure projects. The diverse team of experts at CIM applies its broad knowledge and disciplined approach through the practical management of real assets from due diligence through operation to sale. CIM strives to make a meaningful difference in the world by implementing key environmental, social and governance (ESG) initiatives and improving every community it invests in. Further information is available at www.cimgroup.com.