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Articles Tagged with MacKenzie Realty Capital

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The share price of American Finance Trust (“AFIN”), a REIT that published an estimated net asset value (NAV) of $23.56 a share before listing its shares on the Nasdaq Global Select Market (“Nasdaq”) in the summer of 2018, has continued to languish, reaching a market price as low as $10.08 in trading on April 12, 2019.

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As previously reported, on June 29, 2018, the board of directors of AFIN, formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq, and listed its shares effective July 19, 2018. Although most investors paid $25.00 a share for AFIN shares in the Company’s offerings, AFIN shares have consistently traded well below that price level since the Nasdaq listing.

Last year, a third party known as MacKenzie Realty Capital Inc. made two unsolicited tender offers to purchase AFIN shares for as much as $15.00 per Class A share- offers that AFIN’s board recommended shareholders reject.

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stock market chartAs previously reported, on June 29, 2018, the board of directors of American Finance Trust, Inc. (“AFIN” or the “Company”), formerly known as American Realty Capital Trust V, Inc., announced the approval of a plan to list AFIN common stock on the Nasdaq Global Select Market (“Nasdaq”), under the symbol ‘AFIN’.  The company listed its shares effective July 19, 2018.  Although most investors paid $25.00 a share for AFIN shares in the Company’s offerings, AFIN shares have consistently traded well below that price level since the Nasdaq listing.  AFIN shares have traded as low as $13.15 a share, and closed on July 30, 2018 at $14.93 a share.

As of July 26, 2018, an investor known as MacKenzie Realty Capital, Inc. has now announced a tender offer for shares of AFIN, offering $15.00 per Class A Share (AFIN), $11.27 per Class B-1 Share, and $10.00 per Class B-2 Share.  The performance of the Company since it started trading on July 19 and the relatively low tender offer price may have caught some investors by surprise, since AFIN published an estimated net asset value of $23.56 in June 2018.

Because AFIN was registered with the SEC, the non-traded REIT was permitted to sell securities to the investing public at large, including numerous unsophisticated investors who bought shares through the initial public offering (“IPO”) upon the recommendation of a broker or money manager.  AFIN commenced its initial public offering in April 2013, which closed approximately six months later, raising $1.6 billion in investor equity.  Investors who participated in the IPO paid $25 per share.  AFIN later merged with another REIT known as American Realty Capital Retail Centers of America in a controversial 2017 transaction.

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investing in real estate through a limited partnershipStrategic Realty Trust, Inc. (“SRT”), formerly known as TNP Strategic Retail Trust, Inc. is a non-traded REIT that owns a portfolio of shopping centers.  SRT has reportedly recently been the subject of a tender offer under which a third-party investor known as MacKenzie Realty Capital has offered to purchase shares for just $3.81/share.  According to SEC filings, the most recent Net Asset Value for SRT estimated by the issuer was $6.27/share.  SRT shares were originally sold at $10 a share to investors, meaning that most investors have likely incurred principal losses.

Over the past several years, many retail investors were steered into investing in non-traded REITs such as SRT by stockbrokers or financial advisors.  Frequent selling points for non-traded REIT investments include presenting these securities as steady income-producing investments and as solid long-term investments due to their underlying investments in real estate. Some investors may not have been informed of the complexities and risks associated with non-traded REITs, including the investment’s high fees and illiquid nature.

Currently, investors who wish to sell their shares of SRT have limited options available to exit their investment position.  For example, SRT suspended its share redemption program effective as of January 15, 2013.  During the years ended 2013 and 2014, SRT did not redeem any shares under the redemption program.  Thereafter, on April 1, 2015, SRT’s Board approved the reinstatement of the share redemption program, but only as it relates to the death or qualifying disability of the shareholder.

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