New York City REIT (“NYC REIT”) declared a dividend of $0.10 per share on each share of NYC REIT’s Class A common stock and Class B common stock payable on January 15, 2021 to common stockholders of record at the close of business on January 11, 2021. While the continuing dividends are welcome, they provide modest relief to shareholders whose shares’ value continues to languish, with NYC REIT shares trading at below $10.00 a share during most of 2021.
Previously, on November 12, 2020, NYC REIT filed its quarterly report with the SEC, for the period ending September 30, 2020 and reported a net loss per common share of $(0.96), versus a loss of $(0.38) from the third quarter of 2019. NYC REIT also disclosed that it had only collected 85% of the cash rents due on its portfolio properties, all located in New York City, and stated as follows as to its outlook going forward: “The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital needs, which, beginning in October 2020, include dividends to our common stockholders.”
NYC REIT’s share price has languished since the company listed its shares on the New York Stock Exchange on August 18, 2020. Based on NYC REIT’s current share price, on a pre-split basis, investors who acquired their NYC shares pre-IPO—when the Company was still structured as a non-traded REIT—have suffered losses of 75% or more of the principal invested.
NYC REIT closed its IPO in May 2015, having raised a total of $772 million in investor equity. NYC REIT’s initial offering price as a non-traded REIT was $25 per share. By 2018, its estimated net asset value per share had plummeted over 50%. The board then decided to suspend future distributions, although many investors may have purchased the investment as a source of income. Later, when NYC REIT listed its shares in August 2020, the REIT’s share price plummeted approximately 40% on the first day of trading.
Our firm often handles cases involving direct participation products (DPPs), private placements, non-traded REITs, and other alternative investments. These products are almost always unsuitable for retail investors, who may be unaware of the enormous commissions and fees usually exceeding ten percent of the purchase price, as well as the potential for loss of principal. According to studies, non-traded REITs historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes and the available low-commission alternatives such as publicly traded REITs.
If you have invested in NYC REIT, or another non-traded REIT, and you have suffered losses in connection with your investment (or are currently unable to exit your illiquid investment position without incurring considerable losses), you may be able to recover your losses in FINRA arbitration. 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. 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).
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