Since our last post on Dividend Capital, LLC and the Dividend Capital Total Realty Trust, The White Law Group has heard from a number of investors who have recently received letters from the company regarding the value of their shares. According to those investors, the new price per shares is $6.69 and the quarterly dividend rate is 5.23%. Indeed, a recent filing of with the Securities and Exchange Commission and prospectus for Dividend Capital shares indicate a major restructuring along with new terms for investor repurchase plans. It also appears the Total Realty Trust may now go by a new name – Dividend Capital Diversified Property Fund.
The new offering of Dividend Capital, LLC stock shares is being held as a way for the company to offer liquidity in its non-traded REIT shares. Shares of non-traded REITs generally are highly illiquid but are sold as paying off when the REIT either goes public, liquidates, or is sold to another REIT. According to the company’s SEC Filing, the new Dividend Capital offering is designed to infuse capital to back their fund shares so they no longer have to list a termination date when one of those three events must occur. The new structure comes with a new share repurchase plan – one that purports to allow investors to liquidate their shares at any time for a price determined by a daily calculation of the company’s Net Asset Value (“NAV”). This new plan would take effect October 1, 2012.
The new redemption plan is not without restrictions, however, and it is unlikely that many investors will be able to immediately get all their money out of their Dividend Capital investment. First, Class E Dividend Reinvestment Plan shares are apparently not subject to the new plan and Dividend Capital will only redeem a total of 5% of all outstanding shares in a given year. Second, though an investor may request redemption of any or all of their Class A, W, or I shares at any time, Dividend Capital has instituted a “Quarterly Cap” on redemptions equal to 5% of the total NAV of all shares set on the last day of the previous calendar quarter. As such, depending on the NAV calculation and demand for redemption, investors could remain locked into their Dividend Capital shares for some time. Like all non-traded REIT shares, the Board of Directors reserves the right to change or suspend the redemption plan.
Other non-traded REITs have undertaken similar restructuring methods in attempts to infuse capital into struggling offerings in the past. While it is too early to tell if Dividend Capital is in a comparable predicament, The White Law Group has seen similar efforts by other REITs in attempts to prop up a troubled REIT investment.
The White Law Group’s investigation into the improper sales of non-traded REITs includes, but is not limited to, recommendations to invest in the following REITs: Behringer Harvard REIT I, Inland America Real Estate Trust, Inland Western Retail Real Estate Trust, Wells Real Estate Investment Trust II, Piedmont Office Realty Trust, Desert Capital REIT, Apple REIT, Crystal River REIT, and KBS REIT.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of Dividend Capital Total Realty Trust, please contact The White Law Group at 312-238-9650.
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 Boca Raton, Florida.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.