Business Development Corporation of America
On July 9, 2018, Business Development Corporation of America (BDCA) announced that shareholders had approved a proposal to allow BDCA to issue shares of common stock at a price below NAV. BDCA has not previously sold shares at a price below NAV and management noted in its April 10, 2018, definitive proxy that it did not foresee issuing shares below NAV in the foreseeable future.
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American Finance Trust
On July 9, 2018, American Finance Trust (AFIN) announced that it had conducted a 2-1 reverse stock split and changed its common stock to Class A common stock in furtherance of its phased liquidity plan, which is intended to reduce prospective selling pressure immediately following the listing of AFIN’s Class A common stock on the NASDAQ. The phased liquidity plan additionally includes the reclassification of one-third of the shares of Class A common stock into Class B-1 common stock and Class B-2 common stock, respectively. The Class B-1 shares will convert into Class A shares 90 days after the listing, and the Class B-2 common stock will convert into Class A shares 180 days after the listing. Shareholders will receive 0.5 shares each of Class B-1, and Class B-2 shares, respectively, as a stock distribution on each share of Class A stock. AFIN also reported that the Board approved $200 million to be used for purchases of AFIN stock, as the Board deems prudent, following the listing of shares.
AFIN also announced that its board of directors approved an amendment to its advisory agreement reducing the core earnings per adjusted share hurdles utilized to calculate the advisor’s variable management fee from $0.375 and $0.50 to $0.275 and $0.3125 per share. Post-amendment, the advisor receives 15% of the excess core earnings per adjusted share above $0.275, and 10% of the excess core earnings per share above $0.3125. The Board noted that such changes were intended to align the advisor’s interests with shareholders, and reflected AFIN’s current diversified net-lease strategy from the hybrid mortgage and net lease strategy in place at the time the advisory agreement was executed in 2015.
As previously reported, AFIN announced that the annual distribution per share will be decreased approximately 15.4% from $1.30 to $1.10 starting July 1, 2018. Additionally, the distribution reinvestment plan (DRIP) was suspended on June 30, 2018, beginning with the July 2, 2018, distribution, which was paid in cash. AFIN anticipates that the DRIP will resume at some future date. The share repurchase plan was also terminated effective June 30, 2018.