Elliott Sends Letter to Board of Healthcare Trust of America, Inc.

Elliott Investment Management L.P. and its affiliates (together “Elliott”), which is one of the largest investors in Healthcare Trust of America, Inc. (“HTA” or the “Company”), today sent a letter and an accompanying presentation to the HTA Board of Directors urging the Company to conduct a strategic review.
HTA’s Cumulative Total Shareholder Returns vs. Relevant Benchmarks (PRNewsfoto/Elliott Investment Management L.P.)
HTA’s Cumulative Total Shareholder Returns vs. Relevant Benchmarks (PRNewsfoto/Elliott Investment Management L.P.)
Public REIT Historical Implied Cap Rates (PRNewsfoto/Elliott Investment Management L.P.)
Public REIT Historical Implied Cap Rates (PRNewsfoto/Elliott Investment Management L.P.)
Private Market Cap Rates have Compressed white HTA’s has Stagnated (PRNewsfoto/Elliott Investment Management L.P.)
Private Market Cap Rates have Compressed white HTA’s has Stagnated (PRNewsfoto/Elliott Investment Management L.P.)
Implied Cap Rate (PRNewsfoto/Elliott Investment Management L.P.)
Implied Cap Rate (PRNewsfoto/Elliott Investment Management L.P.)
Independent, Third-Party Survey Results (PRNewsfoto/Elliott Investment Management L.P.)
Independent, Third-Party Survey Results (PRNewsfoto/Elliott Investment Management L.P.)

In the letter, Elliott highlighted HTA’s long-term underperformance and an untenable status quo, as the Company’s cost of capital makes it uncompetitive. Elliott also commissioned a third-party survey that shows that shareholders support its thesis that HTA should explore a sale at a premium valuation rather than pursue a stand-alone growth path.

According to the letter, Elliott stated they were confident that highly credible buyers will present compelling offers to acquire the Company at a substantial premium to the current trading price and prices observed prior to the recent resignation of HTA’s CEO and Chairman, Scott Peters. Elliott also added that since news of its involvement was first made public, it has received numerous private inbounds from other top shareholders voicing their support for a strategic review, including the active solicitation of bids for the Company.

Elliott concluded that it hopes to serve as a partner to HTA in this critical moment, and is eager to work with the Company to secure the best outcome for HTA’s shareholders.

The letter and presentation can be downloaded at RestoringtheTrust.com. The full text of the letter follows:

October 11, 2020

The Board of Directors
Healthcare Trust of America, Inc.
16435 N. Scottsdale Road, Suite 320
Scottsdale, AZ 85254
Attn: Chairman Bradley Blair II
Attn: Interim Chief Executive Officer Peter Foss

Dear Mr. Blair, Mr. Foss, and Members of the Board:

We write to you on behalf of Elliott Investment Management L.P. and affiliates (together “Elliott” or “we”). Elliott has a substantial investment in Healthcare Trust of America, Inc. (“HTA” or the “Company”), making us one of HTA’s largest investors.

First, we thank you for initially meeting with us last month and taking the time to hear our thoughts on the situation you face at HTA over the course of subsequent conversations. We appreciate that the resignation of Mr. Peters, the former Chief Executive Officer, was abrupt and unexpected. Second, we want to make clear that our goal is to work collaboratively with management and the Board of Directors to achieve a positive outcome for HTA’s shareholders, employees and medical tenants.

Introduction

We are making our views on HTA public today to emphasize the urgency of the situation and to ensure that the Board takes the necessary steps to maximize shareholder value. The Company is at a critical juncture following Mr. Peters’ departure, and the Board has not announced a formal strategic review process or (to the best of our knowledge) hired external advisors mandated to assist with such a review. HTA faces an increasingly difficult industry environment, which effectively precludes substantial growth on a value-creating basis. Many other industry participants such as diversified healthcare REITs, non-traded REITs (“NTRs”) and private owners with an ability to employ higher debt levels each have a meaningful cost-of-capital advantage over HTA. At the same time, those industry dynamics, when combined with highly favorable macroeconomic and financing conditions, make HTA’s assets particularly appealing to potential buyers.

HTA’s investors want the Company to explore a sale. This was true prior to Mr. Peters’ departure, and investors hold this belief with even greater conviction today. The decision to appoint a new chief executive officer is among the most important that a Board can make. Before the Board makes a decision regarding the right leadership for the Company going forward, investors believe HTA should run a strategic review, including the active solicitation of bids for the Company, in order to understand and assess all of its strategic options. This review must be transparent, thorough and carried out in good faith; if a “go-it-alone” strategy is perceived as being the Board’s predetermined choice, shareholders will not support that outcome, setting up the Company and any new potential CEO for conflict and failure. Moreover, unless the Board precedes its CEO search with an exhaustive strategic review process that satisfies shareholders, the Company will have difficulty attracting a talented and credible candidate.

 

 

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