March 1, 2017 Comments (0) Blog

Benefit Street Partners Realty Trust Investment Losses

Benefit Street Partners Realty Trust
(Last Updated On: March 14, 2017)

Concerned about investment losses in Benefit Street Partners Realty Trust?

Have you suffered losses investing in Benefit Street Partners Realty Trust? If so, The White Law Group may be able to help by filing a FINRA Resolution claim against the brokerage firm that sold you the investment.

Benefit Street Partners Realty Trust is a publicly registered non-traded real estate investment trust formerly known as Realty Finance Trust. The REIT appointed Benefit Street Partners as its new advisor at the end of September 2016, replacing AR Global Investments – formerly AR Capital.

Benefit Street Partners Realty Trust focuses on commercial real estate debt investments secured by income-producing properties and targets loans and securities – diversified by duration, geographic location, property type, ownership, and tenancy.

The REIT commenced operations in November 2012 and raised $786 million in investor equity prior to closing the offering in January 2016. As of September 30, 2016, the company’s portfolio consisted of 73 loans and 7 CMBS investments.

Tender Offer

MacKenzie Realty Capital Inc., a non-traded business development company, has offered to purchase up to 500,000 shares of Benefit Street Partners Realty Trust common stock for $12.05 per share, according to a filing with the Securities and Exchange Commission. Unless extended, the tender offer, which constitutes 1.58 percent of the outstanding shares, will expire on April 28th.

This is unfortunate news for investors as the original price per share was $25.

According to the offer documents, the REIT had nearly 16,700 holders of record owning a total of 31.7 million shares. Currently, MacKenzie and its affiliates do not own any shares of the company’s common stock, but will pay approximately $6.03 million if all 500,000 shares are tendered.

Benefit Street Partners Realty Trust sent a letter to stockholders recommending they reject the tender offer, stating that it is “substantially below the estimated net asset value per share of $20.05.” The offer price represents a 40 percent discount to the most recent NAV per share that was approved by the board in November 2016.

The REIT also noted that it currently offers a share repurchase program, and in January 2017, paid an average of $19.23 for nearly 473,806 shares repurchased from its stockholders.

Risks of REITs

real estate investment trust (REIT) is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. Some REITs also engage in financing real estate. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

REITs are complex and high risk investments that are really only suitable for sophisticated investors. It is the duty of the brokerage firm to perform due diligence on any investment. They must ensure that the investment is suitable for a particular investor in light of that investor’s age, investment objectives, income, net worth, and investment experience.  Given the current risk of devaluation of these REITs, such investments are likely only suitable for wealthy and/or sophisticated investors.

The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that some investors purchase REITs like Benefit Street Partners Realty Trust. Brokerage firms that sell such products are required to perform adequate due diligence on the investments.  They must ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives.

If you suffered losses investing in Benefit Street Partners Realty Trust and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on the firm, visit http://www.whitesecuritieslaw.com.