The securities lawyers of Gana Weinstein LLP represent investors who have lost millions investing in American Realty Capital New York City REIT (ARC New York REIT, New York City REIT, or NYC REIT) (Ticker Symbol: NYC) a non-traded real estate investment trust (Non-Traded REIT) that recently went public.
Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.
In 2018 NYC REIT ceased making distributions. However, the REIT continued to tell investors that the investment was worth at least $20.26 a share on their initial $25 per share price investment while secondary market sources were projected massive losses. In early 2020 NYC REIT announced that it would go public. REIT investors would realize shares subject to a 2.43-to-1 reverse stock split. Thereafter, 75% of client funds would be converted into Class B shares which could not be sold and would remain illiquid. NYC REIT told investors that by the end of the first listing year all Class B shares would be converted into Class A shares which could be sold on the market.
Once NYC REIT went public and the true value of NYC REIT was revealed investors lost a significant portion of their investment seemingly overnight. At the initial public offering (“IPO”), NYC REIT lost almost 44% of its value in that first trading session. By the end of October 2020 NYC REIT had lost over 63% of its initial public offering price. Investors in NYC REIT have suffered losses of approximately 85% of their initial investment in the Non-Traded REIT and still cannot liquidate the majority of their investment.
As a law firm that represents investors, we have watched the same story as NYC REIT play out over and over again where real estate and other assets are touted as safe and reliable investments only to realize significant losses when the true value is revealed.