A real estate investment trust that focuses on the health care industry, American Realty Capital Healthcare Trust's shares trade on the Nasdaq under the ticker symbol HCT. The REIT owns a portfolio comprising seniors housing communities and medical office buildings in 31 states.
Securities class action basics
On Nov. 20, 2014, Stull, Stull & Brody, as well as TheGrantLawFirm, PLLC, filed a proposed securities class action representing the shareholders of American Realty Capital Healthcare Trust, Inc. who will be eligible to vote on the merger between HCT and another health care REIT, Ventas, Inc. The suit was brought forth in the United States District Court for the District of Maryland.
On June 2, 2014, the two companies announced they had entered into a definitive merger agreement, which would result in HCT investors receiving $11.33 per share of common stock owned.
Shortly after the two REITs announced this, several law firms indicated they were investigating HCT's board of directors.
Rigrodsky & Long, P.A. announced an inquiry on June 4, 2014, indicating that it was looking into whether the decision to enter the merger agreement involved violations of law and breaches of fiduciary duties.
The law firm revealed it was exploring whether HCT's board of directors conducted the appropriate due diligence in terms of looking for transactions that generated the greatest possible value for shareholders of the health care REIT. The investigation centered around the health care REIT's financial performance during the first quarter of 2014, which made the law firm wonder why HCT would sell instead of continuing to expand.
On May 13, 2014, the healthcare REIT released its financial results for the first fiscal quarter, indicating that revenue rose 199 percent from the same time last year to reach $56 million. The company also reported a sharp increase in funds from operations, indicating that this measure surged 173 percent year-over-year to $21.8 million.
In addition, the organization's adjusted funds from operations increased 159 percent to $24.9 million from $9.6 million during Q1 2013. The company completed $222.8 million in gross investments during the first three months of 2014.
Of this amount, $129.9 million went toward senior housing, $35.1 million was placed into medical office buildings, $56.6 million was put into triple-net leased health care and senior housing assets and $1.2 million went to undeveloped land.
"We are off to a tremendous start for the year," said Thomas D'Arcy, CEO of HCT. "Our year-to-date investing activities have enabled us to fully deploy all of the capital we raised prior to our recent public listing. With our current investment pipeline, and a balance sheet to support our growth, we are right on track to reach our stated goal of acquiring $400 to $600 million during the balance of 2014."
Securities class action allegations
After releasing these financial results, the securities class action alleged that some of the defendants made an effort to use a materially false and misleading proxy to solicit shareholder approval for the merger between HCT and Ventas, which will damage the proposed class, as well as the plaintiff.
The suit claims that by making this attempt, the defendants violated SEC Regulation 14a-9, as well as Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.
Members of the eligible class in the proposed securities class action that wish to serve as lead plaintiff have until Jan. 19, 2014, to move the court.