As previously reported, American Finance Trust, Inc. (“AFIN” or the “Company”), formerly known as American Realty Capital Trust V, Inc., listed its shares on Nasdaq Global Select Market (“Nasdaq”), under the symbol AFIN effective July 19, 2018. The Company publicly estimated its net asset value as $23.56 a share during 2018, yet shares have traded below $5.00 a share during 2020, and closed at $6.76 a share on April 13, 2020.
AFIN announced on April 13, 2020 that its Board of Directors (the “Board”) has approved a “short-term stockholder rights plan” to protect the long-term interests of the Company, citing volatile in its share price that has resulted from the ongoing COVID-19 pandemic. AFIN says that the plan is designed to reduce the likelihood that any person or group (including a group of persons that are acting in concert with each other) would gain control of AFIN through open market accumulation of stock by imposing significant penalties upon any person or group that acquires 4.9% or more of the outstanding shares of the AFIN’s common stock without the approval of the Board.
Shares of the former non-traded REIT originally sold for $25.00 each, and the company terminated its share repurchase program at the end of June prior to listing on Nasdaq.
While structured as a non-traded REIT, American Finance Trust’s offering raised more than $1.6 billion in investor equity between April and October 2013. Because AFIN was registered with the SEC, the non-traded REIT was permitted to sell securities to the investing public at large, including numerous unsophisticated investors who bought shares through the initial public offering (“IPO”) upon the recommendation of a broker or money manager. AFIN commenced its initial public offering in April 2013, which closed approximately six months later, raising $1.6 billion in investor equity. Investors who participated in the IPO paid $25 per share. AFIN later merged with another REIT known as American Realty Capital Retail Centers of America in a controversial 2017 transaction.
While it is now publicly traded, AFIN was initially sold as a public, non-traded REIT.
Stockbrokers and financial advisors who sell non-traded REITs and other non-conventional investments have an obligation to recommend these investments only when they have a reasonable basis to recommend them to an individual customer. Advisors also may not sell non-traded REITs or other investments via a misleading sales presentation that omits to disclose material risks. A hallmark of non-traded REITs is their high up-front commissions, typically between 7-10%, which many investors may overlook at the time of purchase, and which may motivate financial advisors to recommend non-traded REITs instead of lower-commission alternatives such as publicly-traded REITs and ETFs.
Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at firstname.lastname@example.org for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, New Jersey, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).