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American Finance Trust (AFIN) Lists on NASDAQ- Revealing Heavy Investor Losses

money whirlpoolAmerican Finance Trust, Inc. (“AFIN” or the “Company”) listed its shares on Nasdaq Global Select Market (“Nasdaq”) on July 19, 2018, with trading opening at $13.15 a share with.   AFIN sold shares to public at $25.00 a share,.  While the trading price of AFIN may fluctuate, it appears that pre-listing investors in the REIT have likely suffered substantial principal losses.

On June 29, 2018, the board of directors of AFIN, formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq under the symbol ‘AFIN’.  In order to effectuate the Nasdaq listing and account for possible downward selling pressure upon listing, AFIN’s board also approved a phased liquidity plan, which includes the following important components through filing amendments to the Company’s charter:

  • 2-to-1 reverse stock split: pursuant to this reverse split, every two shares of AFIN (par value $0.01) are to be converted into one share of common stock (par value $0.02);
  • Share reclassification: the phased liquidity plan also calls for reclassification of shares of common stock into Class A common stock, Class B-1 common stock, and Class B-2 common stock (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).

In addition to these amendments, the AFIN board has also approved the use of $200 million to be used for purchase of AFIN stock following its listing, as deemed prudent by the board.  Finally, the AFIN board has also recently announced that its annual distribution per share will be decreased from approximately $1.30 to $1.10 starting July 1, 2018.  This amounts to a reduction in distribution of approximately 15%.

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.

Non-traded REITS such as AFIN are often marketed  as stable, income-producing investments by financial advisors, and many investors may not have understood AFIN shares’ lack of liquidity or the potential for substantial losses on their investments.

Investors with questions about an investment in AFIN, or another non-traded REIT, who have suffered losses in connection with their investments, may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at for a no-cost, confidential consultation.

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