INVESTOR ALERT—If You Invested In The American Realty Capital New York City Real Estate Investment Trust (REIT), Contact The Wolper Law Firm 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.
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 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 at 800.931.8452 or by email at email@example.com to discuss your specific situation and the legal options available. The Wolper Law Firm represents investors nationwide in securities litigation and arbitration.