CIM Halts Redemptions Due to Merger Plans
The White Law Group continues to investigate FINRA arbitration claims involving non-traded REITs such as CIM Income NAV and CIM Real Estate Finance Trust.
CIM Income NAV Inc., formerly known as Cole Real Estate Income Strategy Inc., is a publicly registered non-traded REIT focused on shopping centers, retail, industrial and distribution, and office properties, according to its website.
According to news reports on January 3, CIM Income NAV completed its merger with CIM Real Estate Finance Trust, Inc. on December 16, 2021. The merger closed following CIM Income NAV shareholder approval of the merger on December 14, 2021. Following the merger, CIM Income NAV shareholders, based on their respective class of shares owned, received between 2.502 and 2.622 shares of CIM Real Estate Finance Trust common stock.
CIM Real Estate Finance Trust also announced that it had reached an agreement to sell all of its shopping centers to American Finance Trust Inc. for $ 1.3 billion.
The deal reportedly includes 81 properties anchored with major retail tenants and grocery centers, according to a press release. Upon completion of the deal, AFIN will reportedly will have a portfolio that will include over 1,000 properties and 29 million square feet.
CIM’s share redemption plan has been suspended due to the merger, and redemption requests currently on file for September will not be honored, according to a letter to shareholders. The company further notes that stockholders may elect to enroll in the CIM Real Estate Finance Trust redemption plan after the proposed merger transaction has been completed.
But according to filings in August 2021, CIM Real Estate Finance Trust doesn’t have a fixed method or date for providing shareholders with liquidity and its share redemption plan has been suspended since August 30, 2020 in connection with its mergers with Cole Office & Industrial REIT (CCIT III), Inc. and Cole Credit Property Trust V, Inc., Cole Office & Industrial REIT, Cole Credit Property Trust V in December 2020.,
According to filings with the SEC, the CIM Real Estate Finance Trust has seen its NAV continue to decline. The board has reportedly declared a $7.20 net asset value per share for the company’s common stock as of March 31, 2021 and shares originally sold for $10.00 each.
How Does a Merger Affect Shareholders?
Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.
Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses
The Trouble with Non-traded REITs
The trouble with non-traded REITs is that they are inherently risky. Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITs are more complex and are better suited for investors that can afford to risk the total losses of their investment.
Brokers often earn extremely high sales commission selling non-traded REITs, sometimes as high as 15%. Unfortunately, the high sales commissions associated with non-traded REITs often provide some broker dealers with enough incentive to overlook suitability requirements.
Brokers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor and are in line with the clients risk tolerance, age, net worth, and investment experience.
If a brokerage firm makes unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment, they may be liable for investment losses through FINRA arbitration.
Free Consultation with a Securities Attorney
For more information on the firm’s investigation, please see:
If you suffered losses investing in CIM Income NAV Inc. Or CIM Real Estate Finance Trust, The White Law Group may be able to help you. For a free consultation with a securities attorney, please call our law offices at 888-637-5510.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.