When New York City Real Estate Investment Trust (REIT) listed on the New York Stock Exchange (symbol NYC), price shares plummeted 41 percent within the first day of trading. The crash hit one group of investors particularly hard—those who had purchased New York City REIT as a non-traded REIT.
The securities team at Levin, Papantonio, Rafferty, Proctor, Buchanan, O’Brien, Barr & Mougey, P.A. is investigating claims from investors who suffered financial losses from their investments in New York City REIT. Our investigation will seek to uncover any misconduct by broker-dealers and financial advisers when they recommended New York City REIT to their clients.
If you invested in New York City REIT and suffered financial loss, our lawyers can seek recovery on your behalf by filing a Financial Industry Regulatory Authority (FINRA) Dispute Resolution claim. If your broker or advisor’s misconduct led you into this investment, we may be able to help you recover your losses.
About New York City REIT
Between 2013 and 2017, broker-dealer firms began selling American Realty Capital (ARC) New York City REIT as a non-traded REIT investment at $25 per share. As recently as July 2020, investors’ monthly account statements reflected a sponsor stated list price of $20.26 per share.
However, the secondary market and previous tender offers told a different story, indicating that capital losses for investors had reached 60 percent—with share prices having dropped to $9 per share. In a branding maneuver crafted to disassociate the product from incidents of fraud and scandal connected with ARC, the investment was renamed to New York City REIT, Inc. in March 2019.
The board of New York City REIT, Inc. listed its common stock on the New York Stock Exchange in August 2020. Prior to the initial public offering (IPO), the board also approved a reverse stock split of 2.43-1—with the intention of cutting the number of outstanding shares and bulking up the stock price. This caused a minimum loss of 50% from the principal investments that took place prior to July 2020.
What Might Have Gone Wrong
Non-traded REITs typically represent extraordinarily complex and rather risky investments. They are generally illiquid and difficult to valuate or sell, as they are not listed on any U.S. exchange. As such, when an investor does sell, they may find themselves doing so at a 40-percent loss off the REIT’s face value.
When financial advisors and broker-dealers caught wind of New York City REIT’s planned initial public offering (IPO), they may have seen a marketing opportunity. Many of these professionals may have presented the non-traded REIT to their investor clients as a way to undo the illiquidity that accompanies a non-traded REIT investment. It is possible that these same financial advisors and broker-dealers further tempted investors with the suggestion that they could recover their original investment capital losses.
Unfortunately, it is not uncommon for brokers and financial advisors to recommend non-traded REIT investments because of the relatively high commission structures that reward these sales. With this motivation, brokers and advisors might mislead their clients into thinking that these investments are not only safe and stable, but also promise hefty returns.
What Our Clients Say
Below are some of the emails and letters that our clients have sent us.
At a time in our life when we were most vulnerable we lost control of our finances. We fell victim to a broker that took huge commissions and did not disclose that we were not able to access our money. Peter Mougey and his wonderful staff worked with us to make us whole again and got our money released. I cannot say enough about their work ethic, professionalism, and kindness during this stressful time for us. We had a 100% positive conclusion to our case and we strongly recommend Peter and the firm. We can now sleep at night! Fred & Pat H.
My husband and I were very pleased with the work that Peter and his team provided. He was very knowledgeable of the circumstances of our case and kept us informed throughout the process. He is extremely qualified and worked diligently on our behalf. We are positive that this case would not have been resolved in our favor had it not been for Peter's expertise and his passion. He definitely cares about his clients and we sincerely appreciate his efforts. Rachel C.
FRS is a governmental body. FRS retained the services of Peter Mougey of the LP law firm in a multimillion dollar lawsuit involving extremely complex issues. Mr. Mougey quickly mastered the issues and gave advice that was vital in bringing about a successful resolution. Two of the most important features of Mr. Mougey’s representation was his understanding of government and his ability to communicate complicated legal concepts to a 10-member board of trustees in language that was easily understood by all. I did not know Mr. Mougey before FRS retained him and, fortunately, have not experienced circumstances where the system would need his services again. However, if needed, I would have no hesitation in retaining his services again. Please let me know if you need any additional information or assistance. Steven S.
Edison's famous adage can't ever be ignored of course: 1 part inspiration and 99 parts perspiration. However the two attitudes must be present indissolubly--both are essential--if results are to be obtained. Peter Mougey’s group is aware of such a requirement, they work very hard at the latter, and the former comes easily to them, a rare combination anywhere to be found indeed. Raphael B.
I would like to express my sincere gratitude to Peter Mougey and your entire team on behalf of my family for the amazing job done during your representation. From day one I received kindness, rapid responses to all of my questions, with polite and patient encounters with all of your staff assistants. You are the best- and I will be eternally grateful to you and your entire team. Michelle E.