Non-Traded REITs

Published on: February 1, 2023

Investors In The Necessity Retail REIT, Inc. (Formerly AFIN) May Have Arbitration Claims

Investors in The Necessity Retail REIT, Inc. (“Necessity REIT”), formerly known as American Finance Trust, Inc. (AFIN) and, before that, as American Realty Capital Trust V, Inc., may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Necessity REIT listed its shares on Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “AFIN” effective July 19, 2018. The Company later changed its name to The Necessity Retail REIT and adopted the ticker symbol “RTL” in February 2022. Before listing its shares on Nasdaq, Necessity REIT (then known as American Finance Trust) published an “estimated per share” net asset value of $23.56 in June 2018- leaving investors surprised when the REIT’s shares plummeted in value after being listed on Nasdaq only a month later in July 2018. The REIT’s shares have continued to languish, and as of January 2023, Necessity REIT shares were trading at below $7.00 a share- meaning that investors who bought shares in the initial offering would have lost well over half of their initial investment.

More recently, an investor in Necessity REIT known as Blackwells Capital, LLC (“Blackwells”) has called for corporate governance changes and new directors for the REIT. According to a recent news article, Blackwells reportedly notes that Necessity REIT trades at a 68.5% discount to its net asset value or “NAV” which, according to Blackwells, represents poor performance relative to comparable REITs. Blackwells reportedly filed a lawsuit against Necessity REIT in December, 2022, challenging Necessity REIT’s interpretation of the meaning of a July 2022 bylaw amendment concerning the appointment of directors to the REIT’s board. Blackwells has nominated two candidates for the Necessity REIT’s board, who have been rejected by the REIT, precipitating the lawsuit.

Published on: December 7, 2022

Shareholders of Lightstone Value Plus REITs I, II and III May Have Arbitration Claims

by InvestorLawyers

Shareholders in Lightstone Value Plus REIT I, Inc., Lightstone Value Plus REIT II, Inc., and/or Lightstone Value Plus REIT III, Inc. (sometimes referred to below as the “Lightstone REITs”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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The Lightstone REITs were sold to the public during various periods dating back to 2006 (Lightstone I), 2009 (Lightstone II), and 2014 (Lightstone III), respectively. Despite the passage of years- over fifteen years in the case of Lightstone I- none of the three Lightstone REITs has been listed on a public exchange or otherwise become liquid.

Recently, the Lightstone REITs solicited proxies seeking shareholder approval for key charter amendments including:

Published on: December 2, 2022

Hartman vREIT XXXI Inc. Questionable As Going Concern- Investor May Have Arbitration Claims

by InvestorLawyers

Investors in Hartman vREIT XXXI Inc., a publicly registered, non-traded real estate investment trust, may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

In its recently filed quarterly report with the Securities and Exchange Commission, Hartman vREIT XXXI Inc. announced its management’s “substantial doubt about the company’s ability to continue as a going concern.” The REIT reportedly has two revolving credit loans totaling $55 million that mature in March 2023. The REIT also has a $2.41 million term loan that is also due to mature in March- calling into question where the REIT will turn for cash when these loans come due.

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In the SEC filing, Hartman vREIT XXXI’s management indicates that it has concluded that there is substantial doubt about the company’s ability to continue as a going concern within one year of the issuance date of their third quarter consolidated financial statements due to the fact of the uncertainty regarding the loan maturities. However, the company also expressed a belief it could likely extend the maturities of the loans to contain these issues.

Published on: November 24, 2021

Moody National REIT II Announces Will Not Estimate Value of Shares- Last Estimate Was $23.50 a Share in 2019

by InvestorLawyers

Investors in Moody National REIT II (“Moody II”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Moody II announced in August 2021 that its Board had made the decision to postpone the valuation of its shares. Considering that the non-traded REIT has not updated its net asset value (NAV) since December 2019, investors may have cause for concern that the shares’ value has dropped. The last estimate of Moody II’s net asset value (NAV) per share- which now seems hopelessly unrealistic- was $23.50 a share as of late 2019.

Moody II is a non-traded real estate investment trust (non-traded REIT). According to secondary market quotes, Moody II shares have decreased in value Investors who were relying on Moody II’s most recent (but now nearly two-year-old) estimated NAV (net asset value) of $23.50 a share announced by its sponsor could be in for an unwelcome surprise, as shares have reportedly been sold on the limited secondary market for prices as low as between $5.50 and $6.00 a share during 2021.

Published on: November 23, 2021

Hospitality Investors Trust (ARC Hospitality) In Bankruptcy- Investors Face Losses of Majority of Principal Invested

by InvestorLawyers

Investors in Hospitality Investors Trust (“HIT”), formerly known as American Realty Capital Hospitality Trust or ARC Hospitality, may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor. Money_REIT-640x401-2-300x188 Money_REIT-640x401-3-300x188

HIT, a public, non-traded real estate investment trust (“REIT”) with a focus on hospitality properties in the United States, declared bankruptcy earlier this year. Originally sold for $25/share, HIT seen a decline in share price over the last few years. In March 2021, secondary market service Central Trade & Transfer (CTT) reported trades in HIT for prices as low as 46 cents a share. In May 2021, Hospitality Investors Trust Operating Partnership, LP filed for Chapter 11 bankruptcy protection. HIT investors later learned that under the bankruptcy plan, their stocks will be canceled and they would be getting contingent cash payments of no more than $6/share. In July 2021, a bankruptcy court in Delaware approved the Chapter 11 restructuring plan.

HIT had previously announced a decrease in its estimated net asset value (“NAV”) to $8.35 a share, down from $9.21 per share. As a publicly registered non-traded REIT, HIT was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares upon the recommendation of a broker or money manager. Original investors of HIT could purchase shares at $25.00 per share.

Published on: June 9, 2021

Sila Realty Trust Recommends Investors Reject $3.57/share Tender Offer

by InvestorLawyers

Investors in Sila Realty Trust Inc. (“Sila”), a publicly registered, non-traded real estate investment trust (formerly known as Carter Validus Mission Critical REIT II) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Sila recently sent a letter to shareholders recommending they reject an unsolicited tender offer by CMG Partners and its affiliates, CMG Income Fund II LLC, CMG Liquidity Fund LLC and Blue River Capital LLC. Under the tender offer, CMG is offering to buy up to300,000 shares of Sila stock for $3.57 each. This price is approximately 59 percent less than the REIT’s most recent net asset value per share of $8.69, announced in December 2020. CMG’s offer expires on July 15, 2021, unless extended. As well as being much lower than Sila’s estimated NAV per share, CMG’s offer price is also lower than certain reported secondary market transactions, which have reportedly taken place at prices over $6.00 a share during 2021.

Sila merged with another REIT known as with Carter Validus Mission Critical REIT Inc. in late 2019. Sila recently announced plans to sell its 29-property data center portfolio to subsidiaries of Mapletree Industrial Trust, a REIT listed on the Singapore Exchange, for more than $1.3 billion. The transaction is expected to be completed in one or more closings during the third quarter of 2021. As of March 31, 2021, Sila reportedly owned 153 real estate properties, consisting of 29 data centers and 124 healthcare properties located in 70 markets across the United States with a total purchase price of approximately $3.2 billion, including capital expenditures on development properties placed into service.

Published on: January 5, 2021

Phillips Edison & Company (PECO) Reports Plans to Purchase Its Own Shares for $5.75 A Share, Reverse Split Shares

by InvestorLawyers

Investors in Phillips Edison & Company, Inc. (“PECO”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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PECO, an internally managed real estate investment trust focused on grocery-anchored shopping centers, recently released the preliminary results of its tender offer to purchase up to 17.4 million shares of common stock from public shareholders at a price of $5.75 per share. Shareholders reportedly tendered approximately 13.5 million shares, and PECO reportedly expects to purchase 100 percent of the tendered shares for approximately $77.7 million beginning on or about January 7, 2021.

PECO also has announced a one-for-four reverse stock split, which reportedly is expected to take place around March 9, 2021, and as a result, every four shares of issued and outstanding common stock will be automatically combined and converted into one share of common stock. A corresponding reverse split of the outstanding OP units will also be effective at that time.

Published on: June 5, 2020

Phillips Edison & Company (PECO) Suspends Distributions and Redemptions

by InvestorLawyers

Investors in Phillips Edison & Company, Inc. (“PECO”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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PECO was formed in Maryland in October 2009 as a non-traded real estate investment trust (or “REIT”), to acquire grocery-anchored shopping centers. In November 2018, PECO officially merged with Phillips Edison Grocery Center REIT II (“Phillips Edison II), a move that caused significant loss to its investors. Investors who purchased shares in PECO at the initial offering acquired shares at $10.00 per share, and while PECO’s sponsor has said that it currently has an estimated net asset value (“NAV”) of $8.75 per share, shares on the limited private secondary market have reportedly traded between $4.50 and $5.50 per share in recent months.

Making matters worse, in March 2020 PECO announced that it would suspended monthly distributions, as well as share repurchases or redemptions, albeit indicating that these suspensions will be temporary. As measures to guard against liquidity issues, PECO also reportedly borrowed $200 million from a revolving credit facility and announced plans to reduce expenses.

Published on: April 21, 2020

Hospitality Investors Trust Investors May Have FINRA Arbitration Claims

by InvestorLawyers

Investors in Hospitality Investors Trust Inc. (“HIT”), a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the broker or financial advisor.

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HIT owns a portfolio of hotel properties throughout North America, including various Hilton-, Marriott- and Hyatt- branded hotels, within the select service and full-service markets. As of December 31, 2018, HIT reportedly owned 144 hotels. The REIT’s offering was declared effective in January 2014 and suspended sales activities in November 2015 after raising $903 million in investor equity, according to Summit Investment Research.

In April 2017, HIT changed its name from American Realty Capital Hospitality Trust to HIT after restructuring to become a standalone self-managed REIT as well as a partnership with Brookfield Strategic Real Estate Partners II. Prior to the restructure and name change, HIT had an agreement with American Realty Capital Hospitality Advisors LLC, and affiliate of AR Global Trust II.

Published on: April 6, 2020

Griffin-American Healthcare REIT III Halves Distribution, Suspends Share Repurchases

by InvestorLawyers

Investors in Griffin-American Healthcare REIT III (“GAH REIT III”), may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the broker or financial advisor.

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GAH REIT III recently announced that it will cut its annual distribution rate in half to $0.30 a share, from $0.60 a share, citing the possible impact of the COVID 19 epidemic on its operations GAH REIT III also suspended its share repurchase plan.

GAH REIT III is a publicly registered non-traded real estate investment trust (“REIT”) incorporated in January 2013 as a Maryland REIT and is registered with the SEC. As such. GAH REIT III was permitted to sell securities to the investing public at large, including retail investors who bought shares on the recommendation of a broker or money manager.