July 19, 2017 Comments (0) Current Investigations

ARC New York City REIT Shareholders Postpone Vote on Charter Provisions

ARC New York City REIT
(Last Updated On: July 21, 2017)

Recovery of Investment Losses in ARC New York City REIT

Have you suffered investment losses in ARC New York City REIT? If so, The White Law Group may be able to help you recover your losses by filing FINRA Arbitration claim against the brokerage firm that sold you the investment.

American Realty Capital New York City REIT Inc. is a non-traded real estate investment trust that owns six real estate properties, including office and retail properties, located in New York City. The company closed its initial public offering in May 2015.

According to recent SEC filings, ARC New York City REIT adjourned its annual meeting of stockholders until August 2, 2017. The meeting was initially scheduled for June 27th and reconvened July 19th.

At issue is a shareholders vote on whether to remove the charter provision that prevents the REIT from retaining any advisor for longer than one year. Affiliated AR Global REITs have sought 20-year management agreements with its external advisor which is controlled by Nicholas Schorsch.

The REIT is also seeking to remove the charter provision that imposes a fiduciary responsibility on the advisor and duty to the company and to the stockholders.

ARC New York City REIT is attempting to prevent the advisory agreement from being terminated on 60 days’ written notice, limiting access to the books and records of the company, allowing the board to privately sell shares in the company, eliminating the ability of 10 percent of shareholders to call a special meeting and giving the board authority to increase this threshold by 5x, and eliminating the current shareholder majority voting requirement before the board can take specified actions.

Dissident shareholder Cove Partner III LLC issued a letter to fellow investors recently, urging that they vote against the proposals, and was instrumental in replacing AR Global as the advisor of New York REIT and making changes to the board of directors.

In October, the board of ARC New York City REIT approved its first estimated net asset value of $21.25 per share. Shares were originally sold for $25.00 each.

Unfortunately for investors, Central Trade & Transfer, a secondary market for private placements, listed shares of ARC New York City REIT for $15.00 per share in June. That’s significantly less than the original purchase price of $25.00 per share.

 REIT Risks

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.

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.

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 or another non-traded 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.