Concerned about your investment in Carter Validus Mission Critical REIT II?
Have you suffered investment losses in Carter Validus Mission Critical REIT II (CVMC REIT II)? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
Carter Validus Mission Critical REIT II is a non-traded, publicly registered REIT that intends to employ a long-term, net lease strategy in order to help mitigate risk, provide greater certainty of rental income and maximize value for fund shareholders, according to its website
Last April, Carter Validus Mission Critical REIT Inc. and Carter Validus Mission Critical REIT II Inc. entered into a definitive agreement to merge in a stock and cash transaction, creating an entity valued at approximately $3.2 billion.
After the merger was completed in December 2019, the board of Carter Validus Mission Critical REIT II approved an estimated net asset value of $8.65 per share for the REIT’s Class A, Class I, Class T, and Class T2 shares of common stock, calculated as of October 31, 2019. Shares originally sold for $10.00 each.
Although the value of its pre- and post-merger real estate portfolio increased, the NAV was negatively impacted by transaction costs incurred from Carter Validus Mission Critical REIT’s debt payoff and other merger-related costs ($0.37), distributions in excess of earnings ($0.08), and a change in the value of interest rate swaps ($0.08), according to filings with the SEC.
Update on May 4, 2020 Tender Offer Price Suggests Losses for Investors
According to reports, Mackenzie Realty Capital has just extended an unsolicited tender offer to purchase shares of Carter Validus Mission Critical REIT II for $4.05 per Class A share. According to the letter to investors, CV REIT II has a declining net asset value after merging with CV REIT I in December 2019. If you owned Carter Validus I, you received 0.4681 Class A Common Shares based on a $9.25 per share NAV for each original share. Carter II reportedly announced a lower NAV of $8.65, an approximate 6.5% decrease in value. Shares of CV REIT were originally sold for $10 per share. The company is reportedly asking shareholders to reject the tender offer.
Further, on April 30, 2020, due to the uncertainty surrounding the coronavirus (COVID-19) pandemic and any impact it may have on CV REIT II, the board of directors has reportedly decided to temporarily suspend share repurchases under the Company’s share repurchase program, effective with repurchase requests that would otherwise be processed on the third quarter repurchase date, which is expected to be July 30, 2020. However, the company says it will continue to process repurchases due to death.
CV REIT II Share Repurchase Limit
Unfortunately for investors, the REIT has reportedly reached its 1.25 percent share repurchase limit for the first quarter of 2020 and will not be able to fully process all repurchase requests.
The board reportedly adopted a new share repurchase program (SRP) in October, where repurchases in 2020 could not exceed 5 percent (1.25 percent quarterly) of the number of shares outstanding on December 31st of the previous calendar year. The company also limits the amount of distribution reinvestment plan proceeds used to fund share repurchases in each quarter to 25 percent of the amount of DRIP proceeds received during the previous calendar year.
Non-traded REITs are complicated and often risky investments which should only be sold to high-net worth and sophisticated investors.
The White Law Group continues its investigation into the liability that FINRA registered brokerage firms may have for improperly selling high-risk REITs, like Carter Validus Mission Critical REIT II, to clients.
Aside from the risks of investing in non-traded REITs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation. Brokerage firms generally make between 7-10% for selling a non-traded REIT, which is far in excess of the typical commission for more traditional investment types.
Fortunately, FINRA does provide an arbitration forum for investors to resolve such disputes. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.
Please contact The White Law Group at 1-888-637-5510 for a free consultation, to determine whether you may be able to recover investment losses incurred as a result of your purchase of Carter Validus Mission Critical REIT II or Carter Validus Mission Critical REIT I.
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. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.