Recent Tender Offer for CIM Real Estate Finance Trust Suggests Investors May Have Losses
Investors in CIM Real Estate Finance Trust, Inc. (CIM, or the Company) who invested on the advice of a financial advisor may be able to recover their losses through FINRA arbitration, if the recommendation to invest lacked a reasonable basis, or if the investor was otherwise misled into making the investment. Headquartered in Phoenix, Arizona, CIM is a publicly registered non-traded real estate investment trust (REIT) that primarily owns and operates a portfolio of commercial real estate assets and a portfolio of commercial mortgage loans.
CIM, formerly known as Cole Credit Property Trust IV, was launched in January 2012, raising approximately $3 billion in investor capital prior to closing its offering in April 2014. The Company merged with Cole Office & Industrial REIT, Inc. and Cole Credit Property Trust V, Inc. in December 2020. CIM’s board recently announced a post-merger net asset value (NAV) of $7.20 per share for the Company’s common stock, valued as of March 31, 2021. This represents a decrease from the previous NAV of $7.31 per share. As of March 31, 2021, CIM had total assets of over $5 billion and total liabilities of nearly $2.5 billion, as compared to total assets of approximately $4 billion and liabilities of nearly $1.8 billion as of June 30, 2020.
According to documents recently filed with the U.S. Securities and Exchange Commission, Tel Aviv-based Comrit Investments 1, LP (Comrit) plans to launch a tender offer for up to 18.3 million shares of CIM at $5.01 per share, with the offer expiring on September 30, 2021 (unless extended). Comrit’s recent tender offer follows a previous offer made to CIM investors which closed in April 2021, at an offer price of $4.50 per share. CIM investors who require immediate liquidity through participation in Comrit’s current tender offer may suffer considerable losses, excluding any distributions to date.
As a publicly registered non-traded REIT, various third-party brokerage firms and their financial advisors recommended an investment in CIM to retail investors nationwide. In some instances, retail investors may have been solicited to invest by their financial advisor without being fully informed of the Company’s risky and complex nature. As a non-traded REIT, CIM is an illiquid investment product, meaning that shares cannot readily be sold on a national securities exchange. Further, non-traded REITs are generally expensive investment products and typically include high up-front fees, including selling commissions to a third party broker-dealer, as well as organizational expenses and offering costs.
Uninitiated investors in non-traded REITs may come to learn too late that their ability to exit their investment position is limited. While in some cases non-traded REIT investors can redeem their shares directly with the investment sponsor, such redemption opportunities may be limited to a percentage of shares held, and in some instances, such redemption programs can be altogether suspended by the sponsor. Alternative options to generate liquidity may include selling shares on a limited and fragmented secondary market, or responding to a tender offer such as Comrit’s recent “Liquidation Opportunity”, options which nearly always entail disadvantageous pricing for the investor.
The attorneys at Giarrusso Law Group LLC have considerable experience in handling claims on behalf of investors in non-traded REITs such as CIM Real Estate Finance Trust, Inc., as well as other complex and illiquid financial products. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us at (201) 771-1115 or info@gialawgroup.com for a no-cost, confidential consultation.