New York City REIT Inc. (NYC) has lost significant value since its public listing in August, 2020. Managed by AR Global, a partnership led by investor Nicholas Schorsch, many investors in the REIT have seen their investment decline by as much as 80%.
Started in 2013, New York City REIT, which invests in commercial real estate in New York, was one of many nontraded real estate investment trusts (REITS) managed by AR Global and Schorsch.
New York City REIT (NYC) Public Listing
Nontraded REITS are illiquid, which means they can’t be easily sold. However, they often pay a high dividend, and the selling brokers sometimes tell investors that a liquidity event (public listing) could happen in the future that will allow them to get their principal out.
Sometimes with nontraded REITS the liquidity event doesn’t happen, as in the case of The Parking REIT, which stopped paying distributions and told investors that a liquidity event may never occur.
With New York City REIT, the liquidity event did occur with a public listing of shares on the Nasdaq, but the value of the shares has declined significantly since. Offered at $25 a share, the REIT trades at $11.35 as of this writing. The loss is even bigger when the July, 2020 2.43-to-1 reverse split is taken into account, which reduced investor’s shares by almost 60%.
According to an InvestmentNews.com article, a $25,000 investment in the REIT is now worth about $5,000.
Scott Silver, Silver Law Group’s managing partner, was interviewed for that article, saying:
“This was the big listing investors were promised, but that $25,000 is down 75% or 80%. The client’s broker told him six years ago to buy it and get the dividend…The average investor never had a fighting chance to evaluate what they had.”
In 2019, Nicholas Schorsch and AR Global agreed to pay $60 million in penalties to settle SEC charges that they and a partner were improperly paid millions of dollars related to REIT mergers they managed.
Recovering Losses Through FINRA Arbitration
Broker-dealers that sold NYC REIT received a 1%-2% commission, and brokers received 7% commission. Brokers have a duty to recommend suitable investments for their clients, and are not supposed to recommend the investments that pay them the highest commission. If you invested in New York City REIT Inc. (NYC), you may be able to recover losses through FINRA arbitration. If it was unsuitable for your investment needs or your financial advisor misrepresented the investment to you, you may have a claim to recover.
Did You Invest In New York City REIT (NYC)?
If you invested in New York City REIT Inc. (NYC), you may be able to recover losses through FINRA arbitration. If it was unsuitable for your investment needs or your financial advisor misrepresented the investment to you, contact us to discuss options to recover your losses. We take most cases on contingency fee, meaning there is no fee unless we recover money for you.
Silver Law Group is a nationally-recognized law firm representing the interests of investors who have been the victims of investment fraud. 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.