Citing underperformance and "untenable" status quo, one of the largest investors in Healthcare Trust of America urged the company to launch a strategic review and explore a potential sale of its real estate trust.
Elliott Investment Management, a Florida-based hedge fund, sent a letter Oct. 11 to HTA's board saying that the company is undervalued and that many of its top investors believe a sale to a private equity firm, a nontraded real-estate investment trust or a strategic buyer would be in its best interest.
The news comes months after Scott Peters, HTA's chair and CEO, stepped down, which Elliott said was "abrupt and unexpected."
"HTA's investors want the company to explore a sale," the letter reads. "This was true prior to Mr. Peters' departure, and investors hold this belief with even greater conviction today."
Elliott outlines several reasons for its letter, including how it consistently underperformed against its self-defined peers, that HTA trades at or below net asset value and cannot consistently issue equity to make accretive acquisitions, and that it believes nontraded real estate investment trusts "are likely to become an even larger and more disruptive competitor."
"HTA faces a challenging stand-alone future given a disadvantaged ability to compete for acquisition targets, the inherently risky task of having to identify and integrate a new CEO and the difficult mission of repairing and rebuilding the company's culture," Elliott concluded.
"HTA's board of directors and management team are committed to acting in the best interest of the company and HTA shareholders," HTA wrote in a statement. "Consistent with its fiduciary duties and commitment to value creation, HTA's board regularly reviews the company's strategic plan, priorities and opportunities to enhance shareholder value. We are open minded and committed to delivering superior returns for all HTA shareholders."