CIM Income NAV, Inc. 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 a letter to investors on September 22, 2021, the company announced that it had entered into a definitive merger agreement with CIM Real Estate Finance Trust, Inc. who will acquire the REIT in a stock-for-stock, tax-free merger transaction.
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 the letter. 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.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.