Moody National REIT I Inc. and Moody National REIT II Inc. jointly announced September 29th that, if all goes according to plan, they will merge, with REIT II acquiring REIT I. The gross merger consideration is to be $11.00 per share of common stock of REIT I before the payment of various fees and costs, but in any case no less than a net $10.25 per share.
The non-binding letter of intent between the two REITs provides that any definitive merger agreement will include go-shop and termination fee provisions.
Both entities are publicly registered, non-listed REITs that focus on select-service hotels in major U.S. markets, and both are sponsored by Moody National REIT Sponsor LLC, an affiliate of the Moody National Cos., a full-service CRE company based in Houston.
A 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 and to 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.
Financial advisors have a fiduciary duty to put their client’s needs ahead of their own. If a stockbroker recommends an investment that is unsuitable for the client or fails to perform adequate due diligence on an investment, the advisor and his/her firm can be held liable for the resulting losses.
The White Law Group continues to investigate the liability that brokerage firms have for recommending REITs unsuitably. The firm has filed FINRA arbitrations to try to recover losses in the following REITs (among others): Desert Capital REIT, Behringer Harvard, Wells REIT, Hines REIT, KBS REIT, CNL Lifestyle, Inland America, Inland Western, Apple REIT, Wells Timberland, Cornerstone REIT, and Cole REIT.
For more information on REITS: Brokerage Firms Cut Ties with Nontraded REITs OR FINRA Awards suggest REITs remain problem in securities industry.
If you believe that you are the victim of your advisor recommending a REIT to you inappropriately, please call the securities attorneys of The White Law Group at (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 Franklin, Tennessee. For more information on The White Law Group visit https://www.whitesecuritieslaw.com.