Sila Realty Trust Goes to the NYSE

A week ago, Sila Realty Trust’s chief executive officer Michael Seton rang the bell at the New York Stock Exchange. The net-lease REIT, founded in 2014, has a $2.1 billion portfolio exclusively focused on the healthcare sector and high-demand properties.

“We were a traditional non-traded REIT,” Seton tells GlobeSt.com. “Originally the REIT had raised its money through the broker-trader network.” But now it has a direct listing on the NYSE. “We’re about a $2 billion enterprise value company.”

In addition, the company is doing a Dutch tender over the 20 days after the listing to repurchase up to $50 million of their shares. The purchase price range is $22.60 to $24,00 per share. The offer expires at 5:00 p.m., eastern time, on July 19, 2024. The Dutch auction structure means existing shareholders bid on the part of the range at which they want to sell their shares. There’s no guarantee that a given shareholder will sell their shares. The company holding the tender starts at the cheapest bids. If the total shares at that price don’t meet the total offer, the company then goes to the next bid level, and so on, until the money for buying shares has been used up.

“The purpose of the Dutch tender is to alleviate some of the selling from our retail stockholder base,” says Seton. The move provides the new listing with an immediate liquidity outlet to “give the optionality to existing stockholders to sell in the open market” with an existing buyer.

The tender helps support the stock price. Set the tender at what they thought was a discount to the net asset value of the company is. Think it’s higher. “We obviously want to buy the shares back at a discount,” says Seton. “We’ve seen a lot of support for our stock from new buyers coming into our stock.” Institutional investors were a large percentage of the opening interest.

As of June 13, the company had $500 million in cash. “We did not pursue an IPO or raising equity capital because the company is leveraged approximately three times EBITDA,” he said. Their portfolio largely consists of medical office buildings, in-patent rehabilitation, and specialty surgical facilities.

Seton says the company acts as a financial partner to the healthcare industry and operators. Large healthcare systems typically act in a spoke-and-hub model. They look to own the hubs, but not so much the spokes. They’ve been under financial pressure since the pandemic and many have done sale-leasebacks on the spoke properties to free capital for reinvestment into the business.