Investigating potential claims involving Steadfast Apartment REIT (Independence Realty Trust Inc.)
According to a press announcement on July 26, 2021, Steadfast Apartment REIT, Inc. and Independence Realty Trust, Inc. (NYSE: IRT) announced that they have entered into a definitive merger agreement under which Steadfast will merge with and into IRT, with IRT surviving as the continuing public company.
On a pro forma basis, the combined company will reportedly own a portfolio of 131 apartment communities comprising approximately 38,000 units across 16 states in the Sunbelt. The combined company is expected to have a pro forma equity market capitalization of approximately $4 billion and a pro forma total enterprise value of approximately $7 billion, according to the announcement.
Under the terms of the merger agreement, each Steadfast common share will be converted into 0.905 shares of newly issued IRT common stock, including cash in lieu of fractional shares.
Following the merger, on a proforma basis, IRT stockholders are expected to own approximately 50% of the combined company’s equity, and Steadfast stockholders are expected to own approximately 50%. The transaction is expected to close during the fourth quarter of 2021, subject to customary closing conditions, including approval of both IRT and STAR stockholders. This strategic transaction was unanimously approved by the Board of Directors of IRT and the Board of Directors of STAR, according to the announcement.
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.
Independence Realty Trust notes it plans to maintain its current dividend level after the merger. The company reportedly pays an annual dividend of $0.48 per share, with a dividend yield of 2.4 percent.
Shares of IRT reportedly closed at $19.91 on Monday, down 0.45 percent from the previous day’s close and dropped an additional $0.81 to $19.10, a decline of 4.07 percent from the previous close, according to an article in the DI Wire today.
Potential Lawsuits to Recover Financial Losses
The trouble with non-traded REITs is that they are complex and inherently risky products. Lack of liquidity is often problematic for many investors. Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale.
According to Central Trade and Transfer, a secondary market for alternative investments, shares of Steadfast were recently sold for $10.67 per share. As of December 31, 2020, estimated value per share of $15.23 per share.
Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses.
If you have suffered losses investing in Steadfast Apartment REIT, please contact The White Law Group at 888-637-5510 for a free consultation.
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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. For more information on the firm, visit www.WhiteSecuritiesLaw.com.