The nationally recognized investment fraud law firm Haselkorn & Thibaut is actively looking into possible securities cases and has a success rate of 98%. The main point of discussion is the potential legal ramifications for brokerage companies improperly recommending Peakstone Realty Trust Inc. (formerly known as Griffin Realty Trust) to their investors.
Peakstone Realty Trust’s most recent developments
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Peakstone Realty Trust, a publicly traded non-traded REIT, has announced a one-for-nine reverse share split, according to the SEC filing from March 8, 2023. The company has declared its plan to issue its common shares on the NYSE on February 21, 2023.
Peakstone Realty Trust has put a halt to its share redemption campaign in anticipation of this listing and is committed to completing the reverse share split. Additionally, subject to class-specific expense adjustments, the Board has decided to reduce its distribution rate for February 2023, which will be paid in March, from $0.10 to $0.08 per common share yearly.
What a Reverse Stock Split Means
A corporation may use a reverse stock split method to lower the number of shares outstanding while increasing the share price. This action can raise the company’s appeal to potential new investors, attract more funding, and provide the appearance that the stock value has increased. However, it could also be a symptom of problems with the company’s finances.
NAV of Peakstone Realty Trust declines
The company’s revised Net Asset Value (NAV) per share as of June 30, 2022 was $7.37, down 18% from the NAV per share of $9.10 reported for 2021. This decline in NAV is attributed by the corporation to the declining value of its office assets, which is largely offset by an increase in the value of its industrial properties.
Losses to Shareholders and a Recent Tender Offer
The board of Peakstone Realty Trust Inc. recently said that it would be neutral about an unsolicited tender offer made in January by CMG Partners LLC and its affiliates. At $3.40 per share, which is around 54% less than the most recent NAV, CMG is currently offering to buy up to 500,000 shares of Class A and Class AA common stock.
Non-Traded REIT Issues
Non-traded Real Estate Investment Trusts (REITs) can be attractive to investors due to their potential for high dividends and the opportunity to invest in real estate without having to buy and manage properties. However, they also come with a number of risks:
- Lack of Liquidity: Non-traded REITs are not traded on a national securities exchange, making them difficult to sell. This lack of liquidity means that investors may have to hold onto their investment for a long period of time, often 7-10 years or more.
- High Fees: Non-traded REITs often have high upfront fees, which can eat into the overall return of the investment. These fees can include selling compensation and expenses, acquisition and asset management fees, and other miscellaneous operational costs.
- Limited Transparency: Because they are not traded on an exchange, non-traded REITs are not subject to the same level of scrutiny and regulation as publicly traded REITs. This can make it more difficult for investors to obtain current, reliable information about the value of their investment.
- Distribution Uncertainty: While non-traded REITs often promise high dividends, these payments can be inconsistent and may even be paid out of capital when rental income is insufficient. This can deplete the value of the underlying assets.
- Risk of Capital Loss: Like all real estate investments, non-traded REITs are subject to market risks. If the properties owned by the REIT decrease in value, the value of the investment will also decrease.
- Lack of Diversification: Some non-traded REITs may only invest in one type of property or in one geographic area, which can increase risk if that particular market segment performs poorly.
- Redemption Restrictions: Non-traded REITs often have strict rules about when and how shares can be redeemed. Some may only allow redemptions at certain times or under certain conditions, and may charge hefty fees for redemptions.
- Potential for Fraud: Due to their complexity and lack of transparency, non-traded REITs have been associated with a higher risk of fraud or misconduct by managers.
Before investing in non-traded REITs, it’s important to fully understand these risks and to consider whether this type of investment aligns with your financial goals and risk tolerance.
Legal Actions That May Be Taken to Recover Financial Losses
Non-traded REITs are by their very nature complex and risky. Investors frequently face hurdles due to liquidity issues. Broker dealers have a duty to match the investor’s age, risk tolerance, net worth, and investment experience with their investment suggestions. Failure to do so could lead to the business being held liable for any losses that occur.
Among the regulatory services provided to the financial industry by the Financial Industry Regulatory Authority (FINRA) are the licensing and oversight of brokerage firms. It also oversees the securities industry’s largest dispute-resolution mechanism.
By submitting a FINRA Dispute Resolution Claim, you may be able to recoup your losses if you experienced losses from investing in Peakstone Realty Trust, Inc. Contact Haselkorn & Thibaut at 1-800-856-3352 for a free consultation. Keep in mind that there is no cost or recovery.
Haselkorn & Thibaut, InvestmentFraudLawyers.com, a national firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is committed to promoting the rights of investors all across the nation.
