CIM Group Combines With Nontraded REIT, Explores Public Offering
CIM Group, a Los Angeles-based real estate firm with $32B in owned and managed assets, combined with its public nontraded REIT and said in public filings this month that it would consider a debut on a major stock exchange.
CIM Group transferred its assets and investments and took over a 67.5% share of a nontraded REIT it had been managing called CIM Real Estate Finance Trust, terminating the management agreement and pledging to consider a public listing. Existing REIT shareholders will keep a 32.5% stake.
The CIM Group REIT had $4.7B in assets spread across 199 commercial properties in 36 states at the end of March, according to its quarterly report. Nearly all of its assets are retail, but it also owns eight office properties and seven industrial properties.
CIM Group is rolling all of its operations into the smaller REIT and taking over its ticker and filing obligations with the Securities and Exchange Commission.
The deal structure provides an off-ramp for investors in funds that were acquired in 2018 when CIM Group acquired Cole Capital Corp. and its five nonlisted REITs, valued at $7.6B, from VEREIT, which itself was acquired by Realty Income in 2021.
The deal could eventually open CIM’s portfolio of high-profile projects like Centennial Yards in Atlanta and Tribune Tower in Chicago to public investment while circumventing the traditional initial public offering route.
The combined entity will have more flexibility to deploy capital and pursue organic M&A and higher return potential across five focus areas: real estate, credit, infrastructure, opportunity zones and strategic operations, according to a presentation filed with the SEC.
The REIT previously wasn’t traded on an exchange, but CIM Group said in an SEC filing this month that it would begin to pursue a common stock listing sometime in the next two years and that the listing would occur within five years.
The combined company is named CIM Group Inc. It is no longer treated as a REIT for tax purposes, but it will continue operating as a vertically integrated developer, owner and lender.
By combining the two platforms, “we are creating a real assets manager with greater scale, stronger alignment, enhanced resources, and a commitment to long-term value creation, while preserving continuity across our leadership team, investment professionals, and operations,” CIM CEO Richard Ressler said in a statement.
CIM agreed to solicit new investors to buy out shareholders in the nontraded REIT, who can also push for a sale of the portfolio if it hasn’t been publicly listed within five years and recapitalization efforts are unsuccessful.
The strategy was unanimously approved by the board of directors and a special committee convened to evaluate its options.
CIM has been trading assets and raising money since the start of the year. It launched a rural opportunity zone fund looking to target data center development in May, a month after pulling in $210M for its majority stake in the 27-acre Miami Worldcenter, which it helped build starting in 2011.
