Steadfast Apartment REIT, Steadfast Apartment REIT III and Steadfast Income REIT Merger
Are you concerned about your investment in a Steadfast REIT?
According to SEC filings on March 2, shareholders of Steadfast Income REIT Inc. (SIR) and Steadfast Apartment REIT III Inc. (STAR III), two affiliated non-traded REITs, have approved the merger with Steadfast Apartment REIT.
The mergers, previously announced in August 2019, would result in a consolidation of STAR III and SIR into non-traded REIT, Steadfast Apartment REIT.
Under the terms of the mergers, STAR III shareholders would reportedly receive 1.43 shares of STAR common stock as consideration, and SIR shareholders would receive 0.5934 shares of STAR common stock as consideration, on a NAV-for-NAV basis.
Steadfast Income REIT and Steadfast Apartment REIT III stockholders will reportedly receive 0.5934 and 1.43 shares, respectively, of Steadfast Apartment REIT common stock.
Steadfast Apartment REIT stockholders will own approximately 48.1 percent of the of the combined company, while Steadfast Income REIT and Steadfast Apartment REIT III stockholders will own 40.6 percent and 11.3 percent, respectively, following the close of the merger.
Update on May 4, 2020 – Net Asset Value Declared
According to filings with the SEC on April 17, 2020, the Board accepted the Valuation Committee’s recommendation and approved $15.23 per share as the estimated value per share of the Company’s common stock as of March 6, 2020.
Secondary Sales Price may indicate Losses for Investors.
In addition to the high risks, non-traded REITs often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale. According to Central Trade & Transfer, shares of Steadfast Apartment REIT were sold on April 14, 2020 for $11.65 per share. This may indicate investment losses for investors.
Investigating Potential Securities Fraud Claims
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.
Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling REITs – as high as 15%. Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market.
Unfortunately, in many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.
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. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.
If you are concerned about the Steadfast REIT merger and would like a free consultation with a securities attorney, please call The White Law Group at 888-647-5510.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.