Real estate investment firm MacKenzie Realty Capital (“MacKenzie”) is offering to purchase shares of The Parking REIT, Inc. (f/k/a MVP REIT II, Inc., hereinafter “The Parking REIT”) for $12.17 per share. The pricing of MacKenzie’s unsolicited tender offer suggests that investors who wish participate in order to generate liquidity will lose money on their investments based on their initial purchase price.
As recently reported, The Parking REIT has merged with MVP REIT, Inc. (“MVP REIT I”), and as a result of the merger, the newly formed entity holds a real estate investment portfolio consisting of 44 parking facilities across 15 states, with an estimated aggregate asset value of $280 million.
The Parking REIT is a publicly registered non-traded real estate investment trust (“REIT”). Unlike exchange traded REITs, non-traded REITs are particularly complex and risky investment vehicles that — as their name implies — do not trade on a national securities exchange. Unfortunately, retail investors are often uninformed by their broker or money manager of the illiquid nature of non-traded REITs. Investors may be unaware that their options to sell shares are limited and often disadvantageous as to pricing and timing, and generally include direct redemption with the issuer, potential sale of shares through a fragmented and illiquid secondary market, or in limited instances — a tender offer by a third-party.
According to publicly available information, investors in MVP I acquired common stock at a price of $9 per share, whereas MVP II’s original offering price was $25 per share. Further, publicly available data concerning the recent merger indicates that MVP I shareholders received 0.365 shares of MVP II common stock for each MVP I share owned.
Unfortunately, shareholders in The Parking REIT who require liquidity have few options at their disposal. For example, as disclosed by MacKenzie through its tender offer, “While management intends to list The Parking REIT’s shares for trading on a national securities exchange, there can be no guarantee that such a listing will occur at all, or in a timely manner.” Moreover, as of September 30, 2017, there appears to be no shares eligible for redemption with the sponsor, unless in the event of a death or disability of the shareholder.
Investors in The Parking REIT may have arbitration claims to be pursued before the Financial Industry Regulatory Authority (“FINRA”), if their investment in The Parking REIT 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 financial advisor. Investors 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.