July 16, 2018 Comments (0) Blog, Current Investigations

Update – American Finance Trust – Liquidity Plan

American Finance Trust

American Finance Trust – Decreases Distributions – SRP Plan Terminated

Did you lose money investing in American Finance Trust at the recommendation of your financial advisor? If so, the securities attorneys at The White Law Group may be able to help you recover your losses through FINRA arbitration.

American Finance Trust (AFIN) is a public, non-listed real estate investment trust formerly known American Realty Capital Trust V.  As of December 31, 2017 AFIN real estate assets, at cost, comprised $3.5 billion.

On July 9, 2018, American Finance Trust (AFIN) announced that it had conducted a 2-1 reverse stock split and changed its common stock to Class A common stock in furtherance of its phased liquidity plan, which is intended to reduce prospective selling pressure immediately following the listing of AFIN’s Class A common stock on the NASDAQ.

According to SEC filings, the phased liquidity plan additionally includes the reclassification of one-third of the shares of Class A common stock into Class B-1 common stock and Class B-2 common stock, respectively. Shareholders will receive 0.5 shares each of Class B-1, and Class B-2 shares, respectively, as a stock distribution on each share of Class A stock.

AFIN also reported that the Board approved $200 million to be used for purchases of AFIN stock, as the Board deems prudent, following the listing of shares.

The company also announced that its board of directors approved an amendment to its advisory agreement reducing the core earnings per adjusted share hurdles utilized to calculate the advisor’s variable management fee from $0.375 and $0.50 to $0.275 and $0.3125 per share. Post-amendment, the advisor receives 15% of the excess core earnings per adjusted share above $0.275, and 10% of the excess core earnings per share above $0.3125. The Board noted that such changes were intended to “align the advisor’s interests with shareholders”, and reflected AFIN’s current diversified net-lease strategy from the hybrid mortgage and net lease strategy in place at the time the advisory agreement was executed in 2015.

As previously reported, AFIN announced that the annual distribution per share will be decreased approximately 15.4% from $1.30 to $1.10 starting July 1, 2018. Additionally, the distribution reinvestment plan (DRIP) was suspended on June 30, 2018, beginning with the July 2, 2018, distribution, which was paid in cash. AFIN anticipates that the DRIP will resume at some future date. The share repurchase plan was also terminated effective June 30, 2018. 

 Investigating Potential Claims

The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended American Finance Trust to investors. The firm continues to receive calls from investors who have lost money in high risk non-traded REITs such as AFIN.

If you suffered losses investing in American Finance Trust, the securities attorneys at The White Law Group may be able to help you. To speak to a securities attorney about the potential to recover your investment losses, please call the offices of 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.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.