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Phillips Edison & Co. (“PECO”), an internally managed real estate investment trust focused on grocery-anchored shopping centers,  recently announced that the REIT’s proposed one-for-four reverse stock split announced last November has apparently been delayed due to “market conditions,” according to filings with the SEC.  The proposed reverse split would have converted every four shares of issued common stock into one share of common stock.

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On March 25, 2021, PECO announced that the REIT is reviewing alternatives in order to provide liquidity to the Company’s stockholders.  Pending this review, PECO’s Dividend Reinvestment Plan (DRIP) has been suspended, beginning with the distribution payable April 1, 2021. Stockholders who would otherwise have elected to purchase via the DRIP will reportedly receive their full distribution ($0.02833333 per share) in cash.

Previously, in 2019, the board suspended standard repurchases under the company’s share repurchase program, but continued repurchases of shares from certain investors who had died or become disabled.

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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.

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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.

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Phillips Edison & Co. (“PECO”), an internally managed real estate investment trust focused on grocery-anchored shopping centers,  recently announced that it has resumed share repurchases upon a stockholder’s death, disability, or incompetency (DDI).  The repurchase price will be equal to the lesser of $5.75 and the company’s most recent estimated net asset value per share of common stock. The REIT’s most recent net asset value per share was $8.75, as of March 31, 2020 (meaning that purchases would be at $5.75 if the estimated NAV per share is not reduced below that price).

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Previously, in 2019, the board suspended standard repurchases under the company’s share repurchase program, but continued DDI repurchases. In March 2020, the board also suspended DDI repurchases under the share repurchase program.

PECO also will make distributions for January 2021 to stockholders of record at the close of business on January 15, 2021 equal to a monthly amount of $0.02833333 per share, or $0.34 per share annualized.

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Resource Real Estate Opportunity REIT (“Resource REIT”), Resource Real Estate Opportunity REIT  II (“Resource REIT II”) or Resource Real Estate Opportunity REIT III (“Resource REIT III”) recently completed previously-announced stock-for-stock merger transactions.  The three affiliated non-traded real estate investment trusts merged in early 2021, combining to form a $3 billion self-managed REIT named Resource REIT Inc.  In the merger transaction, the surviving entity Resource REIT II acquired Resource REIT I and Resource REIT III in separate stock-for-stock transactions.  The REITs also acquired their external advisors in a series of transactions and are now internally managed.

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Resource REIT launched in June 2010 and raised $645.8 million in investor equity prior to closing in December 2013.  Resource REIT II’s primary offering launched in February 2014, closed in February 2016 and raised roughly $645 million in investor equity. Resource REIT III’s offering was declared effective in April 2016 and raised roughly $111.4 million in investor equity. The offering closed in October 2019.

Prior to the merger, Resource REIT and Resource REIT II shares reportedly changed hands in private transactions at significantly lower prices than their reported NAVs (net asset values).  Resource REIT shares are listed at an estimated NAV of $11.10 a share, but reportedly changed hands for between $6.50 and $6.66 a share.  Resource REIT II shares, with a reported NAV of $9.08 a share, reportedly changed hands for between $4.50 and $5.00 a share.

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Investors in Energy 11, L.P. (“Energy 11” or the “Partnership”) may be able to recover investment losses through FINRA arbitration. 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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Energy 11 has published an estimated per common unit  net asset value (NAV) of its common units of $7.23 per unit as of December 31, 2020.  On January 25, 2021, the Partnership filed a Form 8-K with the Securities and Exchange Commission announcing the drop in estimated NAV and explaining its assumptions and valuation methodology.

The Form 8-K is accessible here Form 8-K.

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Investors Summit Healthcare REIT, Inc. (“Summit”) 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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Headquartered in Lake Forest, CA, Summit is structured as a Maryland corporation that qualifies as a real estate investment trust (“REIT”) for tax purposes.  Formed in 2004, Summit was formerly known as Cornerstone Core Properties REIT, Inc.  Following a strategic repositioning of the Company’s property portfolio to focus on healthcare real estate and related assets, the name change was formally adopted in October 2013.

Investors who purchased shares in Summit at the initial offering acquired shares at $8.00 per share, and while it currently has an estimated net asset value (“NAV”) of $2.82 per share, shares of Summit have reportedly traded on the limited secondary market for between $1.23 and $1.30 per share.  Recently, CMG Partners LLC, a known purchaser of distressed nontraded securities, sent Summit investors letters offering to purchase shares for  $0.60 per share.

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Investors in Franklin Square Energy and Power Fund (“FSEP”) 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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FSEP was launched in July 2011 as a closed-end management investment company that operates as a business development company, or BDC. FSEP invests in energy and power companies, including natural gas, natural gas liquids, crude oil, coal, and other types of power. FSEP closed to new investors in November 2016.

Investors who purchased shares in FSEP through the offering acquired shares at $10.00 per share, but according to its sponsor FESP had an estimated net asset value (“NAV”) of $3.32 per share as of September 20, 2020. . Even worse, shares on the limited secondary market have reportedly traded at lower prices of between $1.10 and $1.27 per share.

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Investors in non-traded REITs such as Steadfast Apartment REIT, Steadfast Apartment REIT III and Steadfast Income REIT 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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Steadfast Apartment REIT Inc. (“STAR”), a publicly registered non-traded real estate investment trust, has reportedly lowered its distributions to investors and and amended its share repurchase plan (SRP) to limit repurchase requests to investors who have died or have a qualifying disability.

As pf February 1, 2021, the annualized distribution payment for a share of common stock paid by STAR will be $0.5250.  Prior to the change, STAR distributed $0.90 per share on an annualized basis.  The lowered distributions will begin in March 2021, which is when the payment for February 2021 is remitted to investors.

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Investors in Hospitality Investors Trust (“HIT”), also 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.

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HIT, a public, non-traded real estate investment trust (“REIT”) with a focus on hospitality properties in the United States, reportedly recently amended its limited partnership agreement with a major investor, Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC.  Brookfield reportedly holds all of the outstanding Class C  limited partnership units in the REIT’s operating partnership.  Under the amendment, reportedly Brookfield will receive additional limited partnership units instead of cash distributions to which it would otherwise be entitled.

HIT characterized the move as caused by a cash crunch: “As previously disclosed, due to the impact of the coronavirus pandemic on the company’s business, the company expects it will no longer have sufficient cash on hand to continue to pay its current obligations during the first half of 2021 and the additional liquidity from a source other than property operations the company requires may not be available on favorable terms or at all,” the REIT state in a filing with the SEC. “The objective of the [limited partnership amendment with Brookfield] is to preserve at least in the short-term the company’s cash position as it continues discussions with the Brookfield investor regarding a holistic solution to the company’s liquidity dilemma.”

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Investors in Energy 11, L.P. (“Energy 11” or the “Partnership”) may be able to recover investment losses through FINRA arbitration. 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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On March 19, 2020, Energy 11 announced that it would suspend distributions to limited partners until further notice, citing “recent volatility in the market and oil prices in particular” that “has caused uncertainty to our cash flow for the remainder of 2020.  In December 2020, Energy 11 announced that it would continue to accrue distributions indefinitely, meaning that the distributions will not be paid to investors at least in the coming months of early 2021.

During January and February 2020, Energy 11 had reportedly borrowed $14 million on its revolving credit facility to fund capital expenditures for the Partnership’s in-process drilling program; these borrowings increased the outstanding balance on the revolving credit facility to $38 million.  The commitment amount for the revolving credit facility was $40 million, meaning that Energy 11 had nearly exhausted its available revolving credit.

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