In January 2021, Steadfast Apartment REIT Inc. announced that it is lowering its distribution rate and limiting share repurchases, effective February 1, 2021. Steadfast Apartment REIT is a publicly registered non-traded real estate investment trust (“REIT”). Steadfast invests in apartment communities across the United States.
According to a letter to shareholders, Steadfast is cutting its distribution rate nearly in half, from $0.90 per share to $0.5250 per share.
Steadfast Apartment REIT’s NAV Continues To Decline
As of March 6, 2020, Steadfast’s net asset value (NAV) was reported at $15.23 per share. However, the reduced distributions indicate that things may be worse for the REIT than can be discerned from the NAV. In fact, Steadfast Apartment REIT is trading on the secondary market for approximately $10-$11.
Risks Of Investing In Non-Traded REITs And Alternative Investments Generally
REITs are modeled after mutual funds in the sense that a company owns or finances income-producing real estate and typically offer investors a revenue stream, diversification, and long-term capital appreciation. They are often advertised as sound retirement vehicles because they provide high dividend yields. However, these products are notoriously flawed. In recent years, the Securities and Exchange Commission (SEC) and FINRA have issued warnings and guidance on REITs, pointing to unreasonably and unfairly high commissions and fees, lack of transparency, and lack of liquidity. Investors in REITs can end up losing significant value and being stuck in the investment because REITs are not publicly traded on an exchange.
REITs are a type of alternative investment. Generally, alternative investments are products that are usually private and not subject to the same regulatory scrutiny as publicly traded companies. Alongside REITs, other alternative investments include private placements and business development companies (BDCs).
Before recommending alternative investments to customers, brokerage firms are obligated to conduct adequate due diligence on these alternative investments and to make certain disclosures regarding the qualities and risks of these investments. Unfortunately, many alternative investments decrease in value and leave investors stuck in the investment due to prolonged illiquidity. If the brokerage firm failed to uphold its obligations when investigating and selling the alternative investment, it may be liable for losses suffered by the customer.
Have You Lost Money Investing In Steadfast Apartment REIT?
If you were sold a private placement, REIT, or BDC and have suffered losses, you may be entitled to recovery of your losses.
Silver Law Group is experienced in representing investors in securities and investment fraud cases nationwide. Our lawyers can help you recover investment losses due to stockbroker misconduct and most cases are handled on a contingency fee basis, meaning you won’t owe us any money until we recover your money for you. Scott Silver, managing partner of Silver Law Group, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and has extensive experience representing investors in securities and investment fraud cases. Please contact us for a confidential consultation at firstname.lastname@example.org or toll free at (800) 975-4345.