Concerned about your investment in Griffin Capital Essential Asset REIT?
Third Party Tender Offers may Suggest Losses for Investors Updated on May 7, 2020
Are you concerned about your investment in Griffin Capital Essential Asset REIT? If so, the securities attorneys at The White Law Group may be able to help you to recover your losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.
Griffin Capital Essential Asset REIT, a publicly registered non-traded real estate investment trust, merged with its affiliate Griffin Capital Essential Asset REIT II in April 2019.
Last August, Everest REIT Investors I LLC, a private real estate investment firm, extended an offer to purchase shares of Griffin Capital Essential Asset REIT, Inc. at a purchase price of $7.20 per share.
According to filings with the SEC, the REIT values its shares at $9.58 as of July 30, 2019. The initial offering price was $10.00/share.
Update on May 7, 2020 – Additional Tender Offer
According to a letter to investors on April 20, 2020, Comrit Investments I, Limited Partnership commenced an unsolicited offer to purchase up to 795,229 shares of Class AA common stock, par value $0.001 per share, of Griffin Capital Essential Asset REIT, Inc., at a price of $5.03 per share in cash.
According to the letter, the board recommends against accepting the tender offer stating “the Comrit Offer is not in the best interests of GCEAR’s Class AA stockholders.”
“The Comrit Offer price is significantly less than the current and potential long-term value of the shares of Class AA Common Stock,” according to the board. “As of March 31, 2020, the published net asset value per share of the Class AA Common Stock was $9.26. The Comrit Offer price is $5.03 per share, or approximately 45% less than the last published NAV per share.”
According to the company’s website:
- “There is currently no public trading market for shares of our common stock and there may never be one, so redemption of shares by us will likely be the only way to dispose of your shares.
- The purchase and redemption price for shares of our common stock is based on the NAV of each class of common stock and is not based on any public trading market.
- Our NAV does not currently represent our enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day, the value a third party would pay for all or substantially all of our shares, or the price that our shares would trade at on a national stock exchange.
- Furthermore, our board of directors may amend our NAV procedures from time to time. Our share redemption program generally imposes a quarterly cap on aggregate redemptions of our shares equal to a value of up to 5% of the aggregate NAV of the outstanding shares as of the last business day of the previous quarter.
- We may also amend, suspend or terminate our share redemption program at any time. A portion of the proceeds received in our offerings may be used to redeem or repurchase our shares, which will reduce the net proceeds available to acquire additional properties.
- We may pay distributions from sources other than our cash flows from operations, including from the net investment proceeds from our public offerings, and as a result, we would have less cash available for investments and your overall return may be reduced.
- We may incur substantial debt, which could hinder our ability to pay distributions to our shareholders or could decrease the value of your investment, and our board of directors may authorize us to exceed our charter limit on leverage of 300% of net assets.”
The Trouble with Non-Traded REITs
Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITS, like 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 Griffin Capital Essential Asset REIT to 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 Griffin Capital Essential Asset 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 Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.