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Brixton Capital and The Shidler Group Make Offer to Acquire Transcontinental Realty Investors

Wednesday, 22 September 2021 04:55 PM

Brixton Capital

SAN DIEGO, CA / ACCESSWIRE / September 22, 2021 / Brixton Capital and The Shidler Group (together, the TC Acquisition Group) seek to acquire 100% of the outstanding capital stock of Transcontinental Realty Investors for $44.40 per share in cash.

For the last two months TC Acquisition Group has attempted to engage in constructive conversations with the TCI's Board of Directors (TCI Board) to discuss how the transaction would benefit all the shareholders of TCI.

TC Acquisition Group's efforts have been largely ignored or dismissed by TCI's Board without any apparent effort to understand the value behind TC Acquisition Group's proposal or why a transaction with the TC Acquisition Group would be in the best interest of TCI's shareholders. TC Acquisition Group reached out again September 21, 2021 to TCI's Board to further communicate the terms of its offer and further detail its proposal.

TC Acquisition Group is sharing this information publicly to ensure that all of the shareholders are informed and aware of its offer and the potential to realize meaningful value in the near term.

TC Acquisition Group hopes to facilitate a productive discussion and ultimately negotiate a mutually agreeable transaction that is in the best interest of all TCI shareholders. TC Acquisition Group is eager to engage on a friendly basis with the board and management of TCI, however TC Acquisition Group is concerned about the lack of substantive response to the prior four private letters it sent to the TCI Board outlining (or relating to) the proposal.

TC Acquisition Group believes its proposal would deliver a meaningful premium to TCI's shareholders that also represents an attractive opportunity for shareholders to obtain immediate liquidity at what TC Acquisition Group believes is a full and fair valuation based on its extensive review of TCI's publicly available information. The $44.40 offer price represents a 48% premium to TCI's year-to-date volume-weighted average stock price (VWAP) of $30.00 and a 28% premium to TCI's last closing stock price of $34.77 as of September 20, 2021.

TC Acquisition Group has a strong business interest in TCI and believes that the company is a good strategic fit with its extensive real estate operational and development capabilities. TC Acquisition Group has been following the TCI story and is impressed with the fundamentals underlying the assets in the portfolio. However, TC Acquisition Group believes TCI's ongoing liquidity constraints, near-term cash obligations, complex ownership structure and thinly traded public currency have presented meaningful challenges for management to operate the portfolio to its maximum potential.

While TCI's recent sale of 600 Las Colinas in Irving, Texas afforded some highly needed liquidity for the company's ongoing capital obligations, TC Acquisition Group believes further opportunities of this nature are severely limited and would continue to be at the expense of future growth. Under the ownership and management of its investor group, TC Acquisition Group believes it is well positioned to provide meaningful value to all TCI shareholders.

Brixton Capital is a preeminent private real estate investment firm that seeks to generate superior risk-adjusted returns by unlocking embedded value in commercial real estate transactions spanning all property types. Headquartered in Solana Beach, CA, Brixton is led by a team of seasoned real commercial real estate experts with an average of more than 25 years of experience. With a track record of successful real estate investing spanning four decades and over 900 properties representing $10 billon of asset value, Brixton and its principals have consistently achieved above average returns across multiple real estate cycles. Today Brixton owns and manages a diverse array of real estate assets representing over 10 million square feet of retail, multi-family, office, industrial and land investments across the United States and Europe.

Since its founding by Jay Shidler in 1972, The Shidler Group has become one of the nation's most innovative commercial real estate investment organizations. Through its affiliates, The Shidler Group has made debt and/or equity investments in over 2,000 properties located across the country. The Shidler Group has also founded five NYSE-listed public corporations - many of which were groundbreaking in terms of the nature of assets they facilitated for public REIT investment - which collectively have issued in excess of $40 billion of debt and equity securities. These companies include: First Industrial Realty Trust, the first REIT to give investors the opportunity to invest in a national portfolio of industrial facilities; Corporate Office Properties Trust, one of the first REITs to give investors the opportunity to invest in "essential need" U.S. government-related facilities, currently a major owner of office buildings leased to companies in the defense industry; and TriNet Corporate Realty Trust, the first REIT to give investors the opportunity to invest in commercial properties triple-net-leased to major corporations.

TC Acquisition Group has assembled a team of experienced advisors and counsel, including engaging UBS Investment Bank as its financial advisors and Morris, Manning & Martin, LLP as its legal advisors to assist in moving quickly and efficiently toward consummating a transaction. TC Acquisition Group is highly confident that it can arrange all necessary financing to complete the transaction, including refinancing or replacement of TCI's existing debt. Accordingly, any definitive agreement providing for the proposed transaction will not contain any financing contingencies.

TC Acquisition Group is prepared to move forward with confirmatory diligence immediately and anticipates that its due diligence review could be completed in approximately six weeks from the time that information is made available. TC Acquisition Group has committed the full internal resources of the investor group and its advisors to take this initiative forward to completion on an expedited basis, with the minimum amount of disruption to TCI's business.

This proposal represents a non-binding indication of interest, and the proposed transaction would be subject to the execution of mutually acceptable, negotiated, definitive transaction agreements containing representations, covenants, conditions and other terms that are customary for a transaction of this nature.

TC Acquisition Group believes the next step would be a meeting to discuss this opportunity, and TC Acquisition Group proposes to arrange a meeting during the week of September 27, 2021.

TC Acquisition Group is excited about the opportunity to work closely with the TCI Board and management team with respect to a potential transaction with TCI. TC Acquisition Group believes that its proposal represents an excellent opportunity for all of TCI's shareholders and is prepared to move expeditiously to complete the transaction.

Jennifer Whitelaw
TW2 Marketing 
[email protected]

SOURCE: Brixton Capital

Mergers and Acquisitions
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