March 15, 2021 Comments (0) Blog, Current Investigations, Securities Fraud

Activist New York City REIT (NYC) Shareholder Nominates Board Member after Threatening Proxy Battle  

New York City REIT (NYC) Shareholder Threatens Proxy Battle, featured by top securities fraud attorneys, the White Law Group

 New York City REIT (NYC) Shareholders may have Claims to Recover Investment Losses

Have you suffered losses investing in New York City REIT (NYC) ? If so, the securities attorneys at The White Law Group may be able to help you to recover your losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.   

New York City REIT, formerly known as American Realty Capital New York City REIT Inc., is a publicly registered non-traded real estate investment trust sponsored by AR Global.  New York City REIT invests in properties located in the five boroughs of New York City, with a focus on Manhattan.   

In December we told you about a letter posted to Yahoo Finance, in which an activist shareholder was threatening to launch a proxy battle to exert some control over NYC REIT due to “troubling governance, stock price underperformance and trading price discount to Net Asset Value (NAV).”   

Comrit Investments 1 LP, a “sizeable stockholder,” has now nominated real estate and corporate governance expert Sharon Stern as an independent member of the board, and as we told you in December, threatened that if the board doesn’t agree with the nomination, it would launch a “costly contested election” at the annual shareholder meeting this Spring.   

In the letter, Comrit claimed the New York City REIT CEO is not acting in the company’s best interests after the REIT paid nearly $22 million in management fees in 2019 and 2020 to companies owned and controlled by the CEO and AR Global Investments.   

NYC Stock Price Declines more than 80%   

According to Comrit, the NYC stock price has fallen nearly 60 percent over the past 15 months, and Comrit says it now trades at a discount of 86 percent to net asset value.   

The REIT was previously embroiled in a scandal surrounding its founder Nicholas Schorsch after the company announced that its financial quarterly reports had overstated its revenue and understated its losses in October 2015. Some of the errors, the company said, were intentionally left uncorrected.   

Shareholders were hopeful when the REIT listed its shares on the Nasdaq last year but a 2.43-to-1 reverse split left investors with disappointing results.   

To give an example of how the split affected shareholders, a client’s initial purchase in 2014 of 1,000 shares of the REIT had a value of $25,000. After the reverse stock split, the number of those shares was reduced from 1,000 to 412. That means the client who invested $25,000 now has an investment worth close to $5,000, a deep decline of 80%.   

According to MarketWatch, New York City REIT’s Class A shares opened at $11.42 today, The most recent valuation of the company’s shares was $49.23 on August 13, 2020. Shares were originally sold for $25 per share.   

Potential Lawsuits to Recover Financial Losses  

The White Law Group has represented numerous investors in claims against their brokerage firms for improper recommendations of ARC New York City REIT and other non-traded REITs.   

 Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITS, are considerably more complex and involve a high degree of risk. Unfortunately, many investors were not made adequately aware of the risks and liquidity problems associated with REITs.   

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.   

Firms that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.   

The White Law Group continues to investigate potential securities fraud claims on behalf of investors involving New York City REIT and other AR Global REITs.   

If you have lost money in New York City REIT at the recommendation of your broker and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 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. For more information on the firm, please visit the website at www.whitesecuritieslaw.com.   

 To learn more about the firm’s investigation through the years involving AR Global REITs, please see the following: 
Hospitality Investors Trust, Inc. (HIT REIT) 2021 Update 
Healthcare Trust Inc. (HTI) – Decrease in Net Asset Value 
American Finance Trust (AFIN) Investment Losses 
Vereit Inc. Settles Class Action Lawsuit for $738.5 Million   

   

   

 

 

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