New York City REIT, the real estate investment trust also known as American Realty Capital New York City and sponsored by AR Global, listed on the New York Stock Exchange Under the symbol NYC crashed 41% on the first day of trading. For the investors that purchased NYC REIT as a non-traded REIT, the losses are substantially more.
Haselkorn & Thibaut (InvestmentFraudLawyers.com) has started an investigation into the financial advisors and broker-dealers who sold New York City REIT to investors. Investors are encouraged to call 1 888-628-5590 for a free consultation and portfolio review.
For investors who purchased this non-traded REIT who had financial advisors pointing to this potential IPO as not just an opportunity for liquidity, but also an opportunity to make back the loss of their original investment capital, the reality appears to be very different, and investors who purchased this investment as a non-traded REIT based on promises and representations by financial advisors who were often motivated by high-commission structures for selling these investment products are now faced with some steep losses and often unexpected losses to irreplaceable investment capital in an investment that far too often was recommended as a relatively safe, stable, secure income-producing investment.
New York City REIT owns and invests in commercial real estate across the five NYC boroughs. It owns eight properties including Nine Times Square, 140 Avenue of the Americas, and The Laurel commercial condominium on the Upper East Side. NYC REIT listed 25 percent of its outstanding common stock. Every 120 days after the listing, an additional 25 percent of NYC’s stock represented by Class B common stock will convert into Class A common stock, concluding with all shares listed and freely tradeable within 360 days.
NYC REIT’s Non-Traded Past Problems
Most investors purchased the NYC REIT prior to the listing on the exchange as a non-traded REIT. Non-Traded REITs are very illiquid and typically must be sold in the secondary market substantially below the value of the investment sponsor. Thus investors are often forced to sell for 40% or less the face value of the non-traded value.
The investment was marketed between 2013-2017 as American Realty Capital New York City REIT, Inc. and sold as a non-traded REIT investment by numerous independent broker-dealer firms across the United States. It was originally sold at $25.00/share and even as recently as July 2020 was still appearing on investor monthly account statements at a sponsor stated list price of $20.26/share.
Notwithstanding the sponsor stated list pricing level, the previous tender offers as well as the secondary market (as recent as last month in July 2020) reflected far more significant capital losses for investors as it was trading closer to the $9.00 per share range (reflecting a loss of original investment capital for investors paying $25.00/share of more than -60%).
In March 2019 there was a name change from American Realty Capital New York City REIT (often referred to as ARC NYC REIT) to New York City REIT, Inc. Naturally, the dropping of the American Realty or ARC moniker was intended to try to distance this investment from the accounting fraud and SEC scandals related to Nick Schorsch, ARC (American Realty Capital), and other negative related events.
It is believed to have been an early August 2020 pre-IPO reverse stock split (of 2.43 shares for 1 share), which reduced the overall number of outstanding shares. While this was likely intended to try to help prop up the stock price through the public offering, it is unclear what (if any) material impact it is truly having for investors. Just prior to listing on the exchange, the board approved a 2.43 stock split. This further locked in lower values of NYC REIT. Investors that purchased NYC REIT prior to July 2020 could be looking at a 50% loss or more from their principal investment.
Investors are encouraged to call us at 1 888-628-5590 for a free confidential consultation on recovery losses from NYC REIT. Haselkorn & Thibaut is a national law firm dedicated to protected investors and helping them recover losses.