Elliott Takes Stake in Healthcare Trust, Pushes for Sale

(Bloomberg) -- Activist investor Elliott Investment Management confirmed it has a “substantial investment” in Healthcare Trust of America Inc. and is pushing for the company to run a strategic review, including exploring a potential sale.

The Florida-based hedge fund, run by billionaire Paul Singer, said in letter to HTA’s board that it believes the company is undervalued and that a sale to private equity, a nontraded REIT or a strategic buyer would be in its best interest. 

The news Monday confirmed a report earlier this month by Bloomberg. 

Elliott said it believes HTA is at a critical juncture after the departure of its co-founder and Chief Executive Officer Scott Peters. The firm also said it hired a third party to survey roughly 50% of HTA’s investor base to solicit their views on the matter. 

“HTA’s investors want the company to explore a sale,” Elliott partner David Miller and portfolio manager Austin Camporin wrote in the letter. “This was true prior to Mr. Peters’ departure, and investors hold this belief with even greater conviction today.” 

HTA said in a statement that it had held several discussions with representatives of Elliott, and that its board was committed to acting in the best interest of shareholders. 

The board “regularly reviews the company’s strategic plan, priorities and opportunities to enhance shareholder value,” it said. “We are open minded and committed to delivering superior returns for all HTA shareholders.”

The shares rose as much as 3.1% Monday to $32.70.

Read more: Healthcare Trust of America Shareholder V3 Said In Favor of Sale

The push for a sale comes two months after Peters abruptly resigned in August. When Peters left, the company announced it was launching an investigation into several whistle-blower complaints. HTA said at the time the probe was in its early stages and was unlikely to have an material adverse financial impact on the company, without providing further details.

In the letter released Monday, Miller and Camporin said they believed HTA is at a competitive disadvantage to rivals that are able to deploy higher debt levels because of a cost-of-capital advantage over HTA. Welltower Inc., for example, can pay over 30% more than HTA for the same building and still have the transaction be accretive, they argued, adding that this will limit HTA’s growth prospects. 

“Faced with the decision of receiving a premium valuation today versus the uncertain path of trying to reach the same outcome years in the future with a go-it-alone strategy, we believe the choice is clear,” Miller and Camporin said. “Even if HTA were able to source and execute a handful of marginally accretive transactions in the near future, it would not meaningfully alter the overall analysis regarding the value-maximizing path for the company.”

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