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Newly Listed REIT Serves as Fixed-Income Alternative

NEW YORK ( TheStreet) -- Healthcare Trust of America (HTA - Get Report) last week listed its medical office-focused REIT on the New York Stock Exchange. This inaugural listing was American Realty Capital's subsidiary, Realty Capital Securities, the second successful non-traded REIT listing this year.

The first to list was American Realty Capital Trust (ARCT), a triple-net sector REIT that listed on March 1. Investors purchased these formerly illiquid shares at $10 each and during its first 28 days since the listing, 72 million shares traded and ARCT hit an all-time high, closing at $11.24 per share on April 10. The most recent price for the newly listed stock was $10.70, and the $1.70 billion (market cap) REIT is paying a dividend yield of 6.5%.

By tapping the public markets, HTA's non-traded REIT investors will be able to access targeted full-cycle liquidity while also achieving full investor confidence in an industry that is perceived to be less mainstream. This is a significant milestone for the sponsor as well as the REIT industry as bad news has plagued several non-traded REIT sponsors like Apple REIT, Inland Group, Behringer Harvard and others.

HTA listed its shares (229.5 million common shares) last week and the health-care REIT intends to unlock around 25% of its liquidity. By controlling the demand, HTA will utilize a "Dutch auction" tender offer by buying back up to $150 million of its shares, an emerging method to take a non-traded REIT into the public space. Also by releasing 25% of the shares every six months, HTA will control the potential demand while also attempting to maintain low volatility within the $2.5 billion portfolio. (Class A shares list today and Class B-1 shares list in six months, B-2 shares list in 12 months and Class B-3 shares list in 18 months.)

By entering the public REIT sector, HTA will become the fifth-largest health-care REIT with assets of around $2.5 billion comprising 264 buildings and around 12.44 million square feet. The portfolio is well-balanced with medical-related properties spread over 26 states.

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