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Steadfast Apartment REIT Subject of Tender Offer at $11.86/Share


Investors in Steadfast Apartment REIT, a publicly registered non-traded real estate investment trust or REIT, have an opportunity to sell their shares- but at a price far below the REIT’s estimated per-share value of $15.84 a share, or its initial $15.00 a share offering price.


According to Securities and Exchange Commission filings, Comrit Investments I, a Tel Aviv-based investment fund, has commenced an unsolicited tender offer.  Comrit has offered to purchase up to 337,268 shares of Steadfast Apartment REIT Inc. stock at a price of $11.86 per share in cash. The offer expires on March 28, 2019.

Steadfast Apartment REIT, a publicly listed non-traded REIT, invests in “multifamily properties” throughout the United States.  The REIT closed its public offering in March 2016 and has reportedly raised $788 million in investor equity, as of December 31, 2018. The REIT closed its public offering on March 24, 2016.  Steadfast Apartment REIT marketed itself as focused on purchasing established, stable apartment communities with operating histories that demonstrated consistently high occupancy and income levels across market cycles.  Despite its characteristic high offering fees and expenses, Steadfast Apartment REIT is purportedly worth slightly more than its offering price of $15.00 a share, with management estimating its NAV at $15.84 a share.  However, shares have reportedly recently traded in a limited secondary market at prices as low as $12.70 a share.

Steadfast Apartment REIT offers a share repurchase program or “SRP” at 93 percent of the most recent estimated NAV per share.  However, the annual limit on the number of shares repurchased under the plan during any calendar year.   The REIT also limits its repurchases during a given quarter to $2 million limit worth of shares.  Therefore, while the REIT says its shares’ NAV is $15.84, it is not clear that there is anyone who will actually buy Steadfast Apartment REIT shares at that price.

Non-traded REITs pose many risks that are often not readily apparent to retail investors, and may not be adequately explained by the financial advisors and stockbrokers who recommend these complex investments.  One significant risk associated with non-traded REITs concerns their high up-front commissions, typically between 7-10%.  In addition to high commissions, non-traded REITs generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.

Likely the greatest risk associated with non-traded REITs involves their illiquid nature.  Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange.  Unfortunately, many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited.  Investors in non-traded REITs can sometimes exit their investment through redemption directly with the sponsor, but such redemptions are limited, both as to timing (often redemptions are only done on a quarterly basis), as well as amount (any redemption will be subject to certain terms, including an overall limit on the aggregate number of shares that the REIT will permit to be redeemed at a given time).   Investors may also be able to sell shares through tender offers from time to time (as now with the Comrit offer for Steadfast Apartment REIT), or via a limited secondary market.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in connection with complex non-conventional investments, including non-traded REITs and business development companies (BDCs).  Investors may contact us via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at 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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