Investigating Potential Securities Claims involving Lightstone Value Plus REIT IV
The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended non-traded REITs such as Lightstone Value Plus REIT IV (formerly Lightstone Real Estate Income Trust) to investors.
According to filings with the SEC, Lightstone Value Plus REIT IV (Lightstone IV) has filed a definitive proxy for shareholder approval of certain changes, including charter amendments. The REIT has reportedly scheduled a shareholder meeting on December 16, 2021, to vote on these matters. The REIT officially changed its name on September 15, 2021 from Lightstone Real Estate Income Trust, Inc to Lightstone Value Plus REIT IV.
According to FactRight, a news site for alternative investments, these proposed charter amendments will “erode meaningful shareholder participation in the governance of the Company, reduce potential shareholder transparency, and potentially lengthen the duration of an investment vehicle that was originally marketed as a life-cycle REIT, and as such one has to question whether these provisions are really in shareholders’ best interests.”
The following provisions were addressed:
- Removal of charter provisions defining a quorum as 50% of shareholders to conduct certain matters subject to a shareholder vote. The board of directors would like to amend the bylaws to define a quorum as 35% of all votes entitled to be cast. The Company says this is to “reduce the cost and administrative burden to the Company in connection with obtaining a quorum at stockholder meetings.”
- The company wants to eliminate charter provisions requiring the board of directors to consider a liquidation or dissolution of the Company by March 31, 2022, in the absence of a listing of the common shares on a national stock exchange. According to Fact Right, this date marks the fifth anniversary of the termination of the Company’s public offering.
- The company reportedly wants to reduce shareholder access to certain Company books and records, including the stockholder list, to conform with Maryland default provisions, which restrict such access to shareholders who hold more than 5% of the outstanding shares of a class of stock.
Lightstone IV Suspends Share Redemptions
On March 25, 2020, the board of directors suspended share redemptions but reinstated redemptions for “hardship, including death and disability” in May 2021. While Lightstone IV shares were originally sold for $10.00, the most recently estimated NAV per share was $8.50 as of December 31, 2020. The Company paid special distributions per share of $0.37 in January 2021 and $0.215 in September 2021, according to filings with the SEC.
Lightstone IV’s offering was declared effective on February 26, 2015. The Company had raised gross proceeds of $85.6 million through the sale of approximately 8.9 million shares through 2017.
Are Non-traded REITs a Safe Bet?
Non-traded REITs come with several risks including lack of liquidity. High commissions could be a motivating factor for unscrupulous financial advisors to sell the REIT regardless of whether the investment is in line with the client’s investment objectives and profile. Moreover, the total commissions and expenses make it difficult for non-traded REITs to perform in line with the market.
Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.
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 arbitration.
Free Consultation with a Securities Attorney
If you invested in Lightstone Value Plus REIT IV and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 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 Seattle, Washington.
To learn more about the firm’s investigation, please see:
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.