CIM Tender Offer Extended — Shareholders May Continue to Face Considerable Losses
We recently discussed plans by Tel Aviv-based Comrit Investments 1, LP (Comrit) to launch a tender offer for 18.3 million shares of CIM Real Estate Finance Trust, Inc. (CIM or the Company) at a price of $5.01 per share in cash. The tender offer has been extended to October 22, 2021, according to a recent filing with the U.S. Securities and Exchange Commission. CIM investors who require immediate liquidity through participation in Comrit’s tender offer may suffer considerable losses, excluding any distributions to date. CIM investors may be able to recover their losses through FINRA arbitration, if the investment was made on the advice of a financial advisor and the recommendation lacked a reasonable basis, or if the investor was otherwise misled into purchasing CIM shares.
CIM is a publicly registered non-traded REIT headquartered in Phoenix, Arizona. The Company 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 and raised approximately $3 billion in investor capital prior to closing its offering in April 2014.
Comrit’s extension of its tender offer follows on the heels of CIM’s recently announced acquisition of CIM Income NAV Inc., an affiliated non-traded REIT. If completed, the stock-for-stock transaction would create a commercial credit REIT having an approximate enterprise value of $6 billion (with $3.2 billion in equity value). CIM previously completed stock-for-stock mergers with two other affiliated non-traded REITs – Cole Office & Industrial REIT and Cole Credit Property Trust V. As of March 31, 2021, CIM had a net asset value (NAV) of $7.20 per share for the Company’s common stock. This price represents a decrease from the previous NAV of $7.31 per share.
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 non-traded REIT investors 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. 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 partaking in a tender offer such as Comrit’s, which at $5.01 per share represents a disadvantageous price.
The attorneys at Giarrusso Law Group LLC have considerable experience in handling claims on behalf of investors in non-traded REITs and other complex and illiquid financial products. Investors who invested in CIM Real Estate Finance Trust, Inc. on the advice of a financial advisor may be able to recover their losses 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.