RW Holdings NNN REIT Inc., or NNN REIT, agreed to buy Rich Uncles Real Estate Investment Trust I, or REIT I, in an all-stock transaction.
Both nontraded real estate investment trusts focus on single-tenant net-lease income-producing properties. The deal follows a strategic review that REIT I launched in January.
NNN REIT also reached a contribution agreement with BrixInvest LLC, the external manager and sponsor of both REITs, whereby the latter would transfer all of its assets to NNN REIT's operating partnership.
The parties said both deals will form the largest real estate crowdfunded equity REIT, with more than $450 million in assets under management, and the first financial technology real estate crowdfunding platform to be 100% owned by its own investors.
Under the terms of the merger deal, REIT I shareholders will receive 1.000 share of NNN REIT common stock for each REIT I share they hold, representing $10.16 per REIT I share based on NNN REIT's most recent estimated net asset value per share.
As per the contribution deal, BrixInvest unit holders will receive 1.000 class M unit in NNN REIT's operating partnership, ultimately convertible into a minimum of 5.000 shares. The class M units will be convertible to a maximum of 9.000 shares of NNN REIT common stock after the fourth anniversary of the deal closing date, subject to achievement of certain milestones.
Upon deal closing, NNN REIT stockholders would own 58% of the combined company, with REIT I and BrixInvest stockholders expected to own the other 29% and 13%, respectively.
The combined company's portfolio will comprise 19 retail, 14 office and 12 industrial properties, and no tenant will represent more than 8.1% of the net rents on a pro forma basis, with the top five tenants collectively accounting for 32% of the net rents.
The deals, subject to approvals by the two REITs' shareholders and BrixInvest's unit holders, are expected to close in late December or early January 2020.
UBS Investment Bank was exclusive financial adviser to NNN REIT's special committee of independent directors, and Morris Manning & Martin LLP was its legal adviser. SunTrust Robinson Humphrey Inc. and Cushman & Wakefield Inc. were financial advisers to REIT I's special committee of independent directors, and Corporate Law Solutions PC was its legal adviser. Nelson Mullins Riley & Scarborough LLP gave legal advice to BrixInvest.
