InvestmentNews reports, Inland American Real Estate Trust, Inc was sent a letter by the California Department of Business Oversight regarding the price offered to buy back investors shares. The report indicates that the letter requested clarification as to why the REITs most recent tender offer to repurchase shares was only offering $6.10 to $6.50 per share, when shares were being sold through the REIT’s distribution reinvestment plan (DPR) for up to $8.03.
According to InvestmentNews, Dan Lombardo, Inland American’s vice president of investor relations explained, “‘The current sales price for our DRP shares is $6.94 per share, which is the estimated share value we announced on Dec. 27, 2013,” he wrote. “As we announced on May 1, 2014, the purchase price for shares purchased by us pursuant to our tender offer is $6.50. The $8.03 figure was an estimated share price we announced on Sept. 30, 2010, and it has not been in effect since Dec. 27, 2011. It was set forth in the registration statement simply as a basis to calculate the SEC filing fees.'”
However, the REIT’s share repurchase program has been suspended, this is often indicative of some type of liquidity event such as a merger or public listing. The REIT launched in 2004, is currently one of the largest with approximately $9.7 billion in assets. Despite the REITs size, its value has clearly diminished significantly.
Many investors who purchased Inland American REIT were not fully aware of the risks and liquidity problems associated with nontraded REITs. Brokerage firms have a fiduciary duty to perform due diligence and to adequately disclose all the risks associated with an investment prior to offering it for sale to their clients. Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA dispute resolution claim.
If you invested in Inland America or another non-traded REIT and are interested in discussing your litigation options, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on the firm, visit www.WhiteSecuritiesLaw.com.