Jernigan Capital struck a deal to internalize its external manager in a bid to convert into an equity real estate investment trust.
Under the terms of the definitive asset purchase agreement with its external adviser, JCAP Advisors LLC, the company's Jernigan Capital Operating Co. LLC will acquire all business assets and liabilities of the adviser in exchange for 1,794,872 units, issuable at closing, and a contingent consideration of 769,231 units.
Jernigan Capital noted that the deal consideration will consist exclusively of units of membership interests in the operating company, which may be tendered for redemption one year after issuance for cash or, at the company’s option, on a one-for-one basis in exchange for the company's common shares.
The deal, which is expected to close in the first quarter of 2020, is subject to stockholder approval, among other conditions.
Jernigan Capital added that founder and Executive Chairman Dean Jernigan will retire as a director, effective Dec. 31, with CEO John Good to become chairman.
The company's board also decided that the new annual dividend rate on the company's common stock will be 92 cents per share. As such, it expects to declare the 2020 first-quarter dividend of 23 cents per share at its February regular meeting.
HFF Securities LP was financial adviser to the REIT and its special committee. Hunton Andrew Kurth LLP was legal counsel to the special committee, while FPL Associates was compensation consultant.
Morrison & Foerster LLP was legal counsel to Jernigan Capital, while King & Spalding LLP was legal counsel to JCAP Advisors. Raymond James & Associates Inc. was financial adviser to JCAP Advisors.