The Parking REIT, a non-traded real estate investment trust that has declined in value by over 50%, announced that it is selling the majority of the company to an affiliate of the alternative asset management firm Bombe Asset Management.
The agreement includes an investment by Bombe of $90 million in property and parking assets and $35 million in cash. Bombe will receive operating partnership units and warrants to purchase common stock. Bombe will purchase 1.55 million shares from the REIT’s advisor, its affiliates, and CEO Michael Shustek, for $11.75 each.
About The Parking REIT
The Parking REIT, which began operating in 2015, was formed when 2 non-traded REITS, MVP REIT and MVP REIT II, merged. The company invests in parking lots and garages in the U.S. and abroad.
A class action lawsuit was filed against the company by a shareholder, which alleges that the proxy statements MVP REIT II filed with the SEC for approval to merge with MVP REIT “contained false and misleading statements, that the director defendants breached their fiduciary duties, and the proposed internalization transaction will unjustly enrich certain directors and officers of the company.”
In 2018 the company stopped paying cash distributions to investors.
The company filed a prospectus with the SEC to raise up to $100 million and have a public listing on NASDAQ with the symbol PARK. In 2020, the company said that would not happen because the company “faces significant legal expenses related to pending lawsuits, an SEC investigation, and legal and consulting fees in connection with our exploration of potential strategic alternatives to provide liquidity to stockholders.”.
Michael Shustek, CEO of The Parking REIT, is the subject of allegations involving the company and related entities, including conflicts of interest regarding his ownership and management, and effecting transactions that benefit him at the expense of the shareholders.
Shustek also owns or has an affiliation with, MVP Capital Partners and MVP Realty Advisors. The Parking REIT was been sold by MVP American Securities, a formerly FINRA-registered brokerage firm.
Publicly-available forms filed with the SEC list the following firms as receiving sales compensation for selling The Parking REIT:
- Accelerated Capital Group;
- Centaurus Financial, Inc.;
- Coastal Equities, Inc.;
- Crown Capital Securities, L.P.;
- Forest Securities, Inc.;
- Great Point Capital LLC;
- NI Advisors;
- Sandlapper Securities, LLC;
- Whitehall-Parker Securities, Inc.”
What This Means For Investors
Despite the issues with the company and lack of distribution payments, investors have had no choice but to hold their investment and risk further loss in value because The Parking REIT is illiquid.
The agreement for Bombe to acquire a majority stake in The Parking REIT states that Bombe will begin a tender offer to buy 15% of the outstanding shares of common stock for $11.75 each. Shares of the company originally sold for $25, so investors will take significant losses if they sell.
The agreement states that a settlement fund will be created with 175,000 shares of common stock to settle the three class action lawsuits against The Parking REIT. The settlement is subject to court approval. When the transaction is completed, Michael Shustek will resign as a director and officer of the company.
Did You Invest In The Parking REIT?
If you invested in The Parking REIT, MVP REIT, or MVP REIT II, you may be able to recover your losses through FINRA arbitration. If your broker or financial advisor misrepresented the investment to you, or it was unsuitable for your investment profile, contact us for a consultation to see how we can recover your losses.
Silver Law Group is a nationally-recognized law firm representing the interests of investors who have been the victims of investment fraud. We take most cases on contingency fee, meaning it costs nothing to hire us. Please contact Scott Silver of the Silver Law Group for a no-cost consultation at firstname.lastname@example.org or toll free at (800) 975-4345.