Preferred Apartment Communities (APTS) Update
Have you suffered losses investing in Preferred Apartment Communities at the recommendation of your financial advisor? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.
Preferred Apartment Communities (NYSE: APTS) is a multi-family REIT that has a portion of its portfolio in retail anchored by grocery stores and student housing.
On April 24, 2020, Preferred Apartment Communities reportedly provided an update related to the impact of the COVID-19 outbreak on its operations. The company noted that it had collected rents of 95% on its multifamily assets, 96% on its student housing assets, 71% of overall grocery anchored retail (including 100% of grocery store and pharmacy tenant rents), and 95% of office property rent. APTS stated that, in aggregate, it collected 90% of its monthly rent and real estate investment loan income for April.
APTS apparently withdrew its 2020 guidance in light of significant uncertainties related to the COVID-19 global pandemic.
Unfortunately for investors, shares of APTS are down -45.65% YTD, according to Market Watch.
Instead of operating as a typical non-traded REIT, Preferred Apartment Communities operates somewhat in the reverse. It first listed the company, generated cash flow, and then launched an illiquid, non traded investment, and uses cash flow to cover its dividend to both common and preferred stockholders. The company reportedly uses the proceeds of the preferred shares to acquire properties.
The preferred shares can be redeemed after five years. Investors can sell their shares back to the company immediately after buying them but they must pay a redemption fee that decreases annually. For example, if an investor sells back the preferred shares during the first year of owning it, the redemption fee is 13%.
The Preferred Apartment Communities preferred share offering was quite popular with independent reps and their firms. It raised $101 million from investors in the first quarter of 2016 alone.
Unfortunately, the high fees and commissions for Preferred Apartment Communities are similar to a non-traded REIT at 7% in commissions and 4-5% in dealers’ fees.
Investigating Potential Lawsuits
The White Law Group is investigating the liability that FINRA registered brokerage firms may have for unsuitably recommending REITs, like Preferred Apartment Communities to investors.
Brokerage firms are required to perform due diligence on any offering they recommend and to ensure that all recommendations made are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives.
If a firm fails to perform due diligence or makes an unsuitable recommendation, the broker-dealer can be held responsible for any losses in a FINRA arbitration claim.
FINRA can help resolve problems and disputes through two non-judicial proceedings: arbitration and mediation. FINRA’s Dispute Resolution forum handles nearly all of the securities-related arbitrations and mediations in the United States.
If you have suffered losses in Preferred Apartment Communities, the White Law Group may be able to help you. To speak with a securities attorney about your options, please call the offices at 888-637-5510.
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 and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.