The value of New York City REIT, Inc. has tanked since its public listing in August 2020. According to Investment News, some investors have suffered losses as high as 80% from its initial sales 
What is New York City REIT, Inc.?
New York City REIT, Inc. (NYSE:NYC) is a public real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, particularly Manhattan. The high-commission REIT had an offering price of $25 per share. After a 2.43 reverse split in its July and August listing, the REIT’s shares were trading below $12.00 at time of writing.
What is a REIT?
A Real Estate Investment Trusts is a company that owns or finances real estate. The real estate could include office buildings, apartments, shopping malls, restaurants, mortgages, etc. Most REITS purchase assets as part of their own investment portfolio. REITS allow investors to earn a share of the income produced by the underlying assets.
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.
Brokers have a duty to explain the dangers of Non-Traded REITs to investors before they recommend them. Some of the known dangers of this type of security investment are:
- Large upfront fees. The front-end fees on Traded-REITs can run up to seven percent while the front-end fees for Non-Traded REITs can be as high as 15%. For many investors, investments with much lower commissions and fees such as mutual funds are a better choice. Traded REITs that can be bought in secondary markets are also usually a better choice. Brokers, at a minimum, must explain the choices and the alternative investments to fulfill their duties to the investor.
- Non-Traded REITs are not as safe and stable as they purport to be. Brokers may claim these investments are stable and predictable. FINRA and the SEC have stated that the reverse is often true.
- Early redemption can be costly and is often restrictive. There are often limits on the number of shares that can be redeemed before liquidation.
- Lack of property specification. With Non-Traded REITs, the properties are often not identified, at the time of purchase. Instead, they’re part of a blind pool.
- Lack of liquidity.
- Share Value Transparency. While market prices for REITS are available to investors, the actual value of the underlying assets is much more difficult to ascertain. Also, non-traded REITS often do not provide an estimate of share value until 18 months after their offering closes.
- Conflicts of Interest. Non-traded REITS use external managers who are paid significant incentive fees based on assets under management. These fees may not be in the best interest of investors.
Have you suffered losses investing in New York City REIT? The attorneys at Frankowski Firm will fight to recover your losses.
The legal team at The Frankowski Firm has sadly seen the fortunes of too many investors crushed when Non-Traded REITs fail to perform due to up-front broker fees and other risks. Our securities negligence lawyers hold brokers and brokerage firms accountable when these financial advisors oversell REITs in order to gain a fee. We also hold these advisors responsible when conflicts of interest exist, when brokers fail to make proper disclosures, and when investment firms fail to supervise their brokers.
New York City REIT Lawsuit – Contact Us
If you lost money investing in New York City REIT, Inc., or your broker or advisor recommended New York City REIT, Inc., please call the Frankowski Firm at 888.741.7503 or fill out this contact form.