The Fund announced that its Board of Directors has approved the terms of the issuance of transferable rights to the holders of the Company’s common stock (par value $0.001 per share), as of the record date, January 17, 2020.
The Advisor believes this is an attractive time to raise additional assets for the Company based on several factors, including the following potential benefits:
Opportunities for incremental investments in U.S. real estate investment trusts (“REITs”) with strong fundamentals that the Advisor believes represent value
Investment opportunities in digital REIT sectors such as cell towers and data centers, in which the Advisor believes significant opportunity exists
Potential enhancement of long-term total return potential for the Company’s net asset value
Expected positive impact to total expense ratio by spreading fixed costs over a larger capital base
Reduction in the Company’s unrealized appreciation per share will allow the Company’s Portfolio Managers to rebalance the Company’s portfolio with greater tax efficiency
Potential for increased trading volume and liquidity of RQI common stock
Certain key terms of the Offer include:
Holders of Common Stock on the Record Date (“Record Date Stockholders”) will receive one Right for each outstanding share of Common Stock owned on the Record Date. The Rights entitle the holders to purchase one new share of Common Stock for every 3 Rights held (1-for-3); however, any Record Date Stockholder who owns fewer than three shares of Common Stock as of the Record Date will be entitled to subscribe for one share of Common Stock. Fractional shares of Common Stock will not be issued upon the exercise of Rights; accordingly, Rights may be exercised only in ratios of 1 new share of Common Stock for every 3 Rights, except that any Record Date Stockholder who owns fewer than 3 Rights as of the Record Date may subscribe, at the Subscription Price (defined below), for one full share of Common Stock.
The subscription price per share of Common Stock (the “Subscription Price”) will be determined on the expiration date of the Offer, which is currently expected to be February 13, 2020, unless extended by the Company (the “Expiration Date”), and will be equal to 95% of the average of the last reported sales price of a share of Common Stock of the Company on the New York Stock Exchange (the “NYSE”) on the Expiration Date and each of the four (4) immediately preceding trading days (the “Formula Price”). If, however, the Formula Price is less than 90.25% of the Company’s NAV per share of Common Stock at the close of trading on the NYSE on the Expiration Date, the Subscription Price will be 90.25% of the Company’s NAV per share of Common Stock at the close of trading on the NYSE on that day. The Subscription Price will be determined by the Company on the Expiration Date.
Record Date Stockholders who fully exercise all Rights issued to them can subscribe, subject to certain limitations and allotment, for any additional shares of Common Stock which were not subscribed for by other holders of Rights at a discount to the market price. Investors who are not Record Date Stockholders but who otherwise acquire Rights, are not entitled to subscribe for any additional shares of Common Stock. If sufficient shares of Common Stock are available, all Record Date Stockholders’ over-subscription requests will be honored in full. If these requests exceed available shares of Common Stock, they will be allocated pro rata among Record Date Stockholders based on the number of Rights originally issued to them by the Company.
Rights are transferable and are expected to be admitted for trading on the NYSE under the symbol “RQI RT” during the course of the Offer, January 17 through February 13, 2020. During this time, Record Date Stockholders may also choose to sell their Rights.
The Offer is subject to the effectiveness of the Company’s registration statement currently on file with the SEC and will be made only by means of a prospectus supplement and accompanying prospectus.