Investor Lawyers Blog
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.
Sila is a net lease real estate investment trust with a focus on healthcare assets. Sila recently reported that it has received approval to list its common stock on the New York Stock Exchange with trading expected to commence on the NYSE on June 13, 2024, under the ticker symbol “SILA.”
Sila merged with another REIT known as with Carter Validus Mission Critical REIT Inc. in late 2019. As of 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. Sila was incorporated on January 11, 2013 as a Maryland corporation that elected to be taxed as a real estate investment trust (REIT).
As a publicly registered non-traded REIT, Sila 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. Sila began offering securities in May 2014, and after raising $1.2 billion in investor equity in its initial primary offering, launched a follow-on offering that terminated in November 2018 after raising an additional $86.9 million.
In connection with listing on the NYSE, Sila reportedly intends to commence a $50 million modified “Dutch auction” tender offer, which has the potential to provide liquidity for investors. The price range for the tender offer will be announced at the launch of the tender offer, which is expected to occur on the same day as the listing on the NYSE.
Non-traded REITs are generally illiquid investments. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange. Many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited. Typically, investors in non-traded REITs can only exit their investment through redemption directly with the sponsor on a limited basis, and often at a disadvantageous price, or through sales in a limited secondary market.
But now that Sila has been approved for listing on NYSE, investors will finally be able to sell their shares in a liquid market. However, past history of direct listings on non-traded REITs on stock exchanges suggests that the REIT’s shares will likely trade at a substantial discount to their net asset value or “NAV”, which was reported by the Company as $7.48 a share as of December 2023. However this NAV refers to the value of Sila shares prior to a one-for-four reverse split of shares that occurred on May 1, 2024. After the split, investors will now hold one-quarter of the shares that they previously held, and will have to divide the share price in trading on the NYSE by four in order to assess whether they have gained or lost money on their shares relative to their purchase price.
Investors who wish to discuss a possible claim concerning Sila or another alternative investment may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, 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). This article is intended as ATTORNEY ADVERTISING and is not an official announcement.