On August 18, 2020, shares of New York City REIT, Inc. (NYC REIT or the Company) (NYSE: NYC) began publicly trading. Unfortunately for investors, NYC REIT shares lost approximately 40% of their value following the Company’s first day of trading, having opened the trading session at $30 per share and closing at $17.60 per share. As of this writing, shares of NYC REIT are currently trading for about $12 per share.

Headquartered in New York City, NYC REIT was formed in December 2013 as a Maryland corporation and operates as a real estate investment trust (REIT). As of June 30, 2020, the Company owned eight properties located throughout the city’s five boroughs. Many investors in NYC REIT acquired their shares prior to its August 2020 public listing when the Company was still structured as a non-traded REIT.

As a publicly registered non-traded REIT, NYC REIT was sold through a public offering from around 2013 through 2017 at an offering price of $25 per share. Prior to its public listing, the Company’s Board of Directors effectuated a 2.43 to 1 reverse stock split. When considering this pre-IPO stock split, NYC REIT shares—which currently trade around $12 per share—are thus only worth about $4.95 per share on a pre-split basis.

While the Board of Directors has expressed confidence in NYC REIT’s business model focused on ownership of a “portfolio of high-quality commercial real estate” in New York City, NYC REIT shares have severely underperformed amidst the COVID-19 pandemic. Adding further pressure to NYC REIT’s share price moving forward, the Company’s August 18, 2020 IPO only included listing 25% of NYC REIT’s outstanding common stock. Specifically, every 120 days following its IPO, NYC REIT intends to convert an additional 25% of its current Class B shares to Class A shares for public listing. In light of current and anticipated near-term economic conditions, the additional shares being listed every 120 days will likely add additional downward pressure to NYC REIT’s share price.

Investors in NYC REIT—particularly those pre-IPO investors who acquired their shares before the August 18, 2020 public listing—who invested on the advice of a financial advisor may be able to recover their losses through FINRA arbitration. This course of action may be appropriate if the advisor’s recommendation to invest lacked a reasonable basis or if the investment was sold through a misleading sales presentation. In certain instances, investors who purchased shares on the recommendation of a stockbroker may have been uninformed of the complex nature of the investment and its many risks, including its high up-front commissions and fees. Such high commissions and fees for non-traded REITs add up quickly and act as an immediate drag on investment performance.

The attorneys at Giarrusso Law Group LLC have significant experience in prosecuting claims on behalf of investors in non-traded REITs such as NYC REIT, in addition to other complex and illiquid financial products. Investors may pursue a claim to recover losses through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation.