March 16, 2017 Comments (0) Current Investigations

ARC New York City REIT Secures $140 Million Barclay’s Loan

ARC New York City REIT
(Last Updated On: March 16, 2017)

Suffered losses investing in ARC New York City REIT?

Are you concerned about losses investing in ARC New York City REIT? If so, The White Law Group may be able to help you recover your losses.

American Realty Capital New York City REIT Inc. (ARC New York City REIT) is a publicly registered non-traded real estate investment trust sponsored by AR Global. Recently the company entered into a loan agreement with Barclays Bank PLC for $140 million.

ARC New York City REIT invests in properties located in the five boroughs of New York City, with a focus on Manhattan. The company closed its initial public offering in May 2015 and has raised a total of $760 million in investor equity, as of September 30, 2016.

The company owns six properties valued at $785 million, and in October 2016, the company’s board approved an estimated net asset value of $21.25 per share. The initial offering price in 2013 was $23.75. Unfortunately for investors, Mackenzie Capital, a secondary market for private placements, extended a tender offer in January for  just $12.50 per share.

The loan from Barclays Bank PLC is secured by a mortgage on the company’s 545,000-square-foot office property located at 123 William Street in downtown Manhattan, which ARC New York City REIT purchased in March 2015 for $253 million.

The loan bears interest at a rate equal to 4.666 percent and requires monthly interest payments, with the principal balance due on the maturity date of March 6, 2027.

A portion of the proceeds was used to repay the approximately $96 million outstanding principal balance on the existing mortgage loan secured by the property. In connection with the financing of the loan, the REIT paid its advisor, New York City Advisors LLC, a $1.1 million financing coordination fee.

The loan agreement requires that the REIT’s operating partnership maintain, on a consolidated basis, a minimum net worth of $100 million and a minimum liquidity of $5 million. The loan may be accelerated only in the event of a default and may only be prepaid prior to December 6, 2026 upon payment of a penalty based on a yield maintenance formula of not less than 1 percent of the principal amount being repaid.

The Problem with Non-Traded REITs

Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITS, are considerably more complex and involve a high degree of risk. Unfortunately many investors were not made adequately aware of the risks and liquidity problems associated with REITs.

The White Law Group has represented numerous investors in claims against the brokerage firm that recommended non-traded REITs such as ARC New York City REIT to its investors.

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.

Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.

If you have invested in ARC New York City REIT and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 for a free consultation.

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