INVESTOR ALERT—If You Invested In The American Realty Capital New York City Real Estate Investment Trust (REIT), Contact The Wolper Law Firm, P.A. To Discuss Your Legal Options

The American Realty Capital New York City Real Estate Investment Trust (REIT) seeks to provide its investors with a combination of current income and capital appreciation through strategic investments in high-quality commercial real estate located within the five boroughs of New York City, particularly Manhattan.  It is a non-traded REIT, which means that it does not actively trade on an exchange.  Non-traded REITs are typically less liquid than REITs that trade on an open exchange.  Investors were led to believe the returns for exceed 10% on an annualized basis. http://www.newyorkcityreit.com/ The initial public offering price of the ARC NYC REIT was $25 per share.  By 2018, the price per share dropped below $12.  In March 2018, the company announced that it suspended distributions.  According to the Board, the suspension of future distributions was made in order to enhance the non-traded REIT’s ability to execute on acquisitions, as well as conduct repositioning and leasing efforts related to its property portfolio.  Financial Advisors often solicit customers to invest in REITs or other privately held securities because there are high commissions associated with those transactions.  These products are complex and often times illiquid, meaning that investors cannot freely sell them into the marketplace.  These investment products are generally suitable for investors that are wealthy, sophisticated and have a long term investment horizon. Unlike traditional stocks and publicly traded REITs, non-traded REITs do not trade on a national securities exchange.  Therefore, many investors in non-traded REITs like ARC NYC REIT, have limited options when it comes to exiting their investment position.  For example, investors in non-traded REITs typically can only redeem shares directly with the sponsor on a limited basis, and often at a disadvantageous price.  Or, investors may be able to sell shares through a limited and fragmented secondary market.  Finally, investors may be presented with limited market-driven opportunities — such as a tender offer — to sell their shares at a disadvantageous price. In 2020, the NYC REIT finally went public and turned out to be an epic failure. The price per share precipitously declined and investors were left with large losses. This is the latest example of REIT investments turned bad based upon Financial Advisors’ failure to conduct appropriate due diligence and make suitable recommendations to their retail clients. Non-Traded REIT products are rarely a good solution for investors. The Wolper Law Firm, P.A. has extensive experience handling legal claims regarding REITs, privately held investments and other complex, structured investment products.  If you or someone you know invested in the ARC NYC REIT, please contact the Wolper Law Firm, P.A. at 800.931.8452 or by email at mwolper@wolperlawfirm.com to discuss your specific situation and the legal options available.  The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration.

INVESTOR ALERT—Recover Your Investment Losses In American Realty Capital n/k/a American Finance Trust (AFIN)

The Wolper Law Firm, P.A. is currently representing clients in the recovery of investment losses realized in American Realty Capital n/k/a American Finance Trust (AFIN).  At the initial offering, and when most investors purchased shares, American Realty Capital n/k/a American Finance Trust (AFIN) was a non-traded real estate investment trust (“Non-Traded REIT”).

Non-Traded REITs are securities that do not trade on a public securities exchange.  For this reason, Non-Traded REITs can be illiquid, meaning investors may be unable to sell their investments on demand.  The underlying collateral of the REITs consists of income producing residential or commercial real estate.  Typically, the commissions generated on Non-Traded REITs are higher than industry norm (approx. 7%) and the investments themselves may be subject to extreme volatility due to associated risk factors.  Non-Traded REITs are only suitable for investors with a long-term investment horizon who are willing to accept higher levels of risk in their investments. 

In 2015, through a merger/consolidation of some of the Non-Traded REITs operated by American Realty Capital, the securities were rebranded under the name American Finance Trust.

In 2018, American Finance Trust publicly listed its previously non-traded securities under the ticker symbol “AFIN.” Through this public offering, “A” class shares became publicly traded.  The remaining “B” shares are still non-traded and being converted in stages.

In July 2018, the price of American Finance Trust (AFIN) sharply declined by approximately 40% after a competing REIT made a tender offer of $15.00 for outstanding shares of AFIN.  This outcome is completely contrary to the marketing pitch most Financial Advisors made to clients in order to induce them to purchase shares of AFIN or one of its pre-merger Non-Traded REITs. 

AFIN has continued to decline in value, further eroding investors’ principal.  As of March 2019, AFIN is trading at less than $11.00 per share, representing a 56% decline from the par value price of $25 per share. 

Bruce Kelly of Investment News stated:  “How on earth is the listing of AFIN an ‘optimal result’ for its shareholders?  To call it anything less than a disaster is a joke.” 

AFIN is managed by American Financial Realty Trust, which is principally owned by Nicholas Schorsch.  Mr. Schorsch and American Financial Realty Trust have recently been the subject of regulatory scrutiny and shareholder lawsuits that have resulted in settlements measuring in the tens of millions.

The prospectus for the American Realty Capital n/k/a American Finance Trust (AFIN) states that the investment “involves significant risk and is suitable only for persons who have adequate financial means, desire a relatively long-term investment and will not need immediate liquidity from their investment.”  Many Financial Advisors pitched Non-Traded REITs as safe, income producing investment vehicles.  In reality, Non-Traded REITs are only suitable for those investors with aggressive risk profiles who have a long-term investment horizon. 

If you are an investor in AFIN, and are looking for an attorney to evaluate your legal options, contact the securities litigation and arbitration attorneys at the Wolper Law Firm, P.A., P.A.  The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.