New York City REIT Continues to Underperform — Investors Face Substantial Losses

Investors in New York City REIT, Inc. (NYC REIT or the Company) (NYSE: NYC) may be able to recover their investment losses through FINRA arbitration, provided the recommendation to invest lacked a reasonable basis, or if the investor was otherwise misled into making the investment. Following its August 2020 public listing at $30 per share, NYC REIT has suffered suboptimal performance, and as of this writing is trading at around $11.50 per share. More troubling still, on a split-adjusted basis when accounting for the Company’s pre-IPO reverse stock split (on a 2.43 to 1 basis), shares of NYC REIT are only trading at around $4.75 per share.

Structured as a publicly registered non-traded REIT, NYC REIT was sold to numerous investors nationwide from 2013 through 2017 at an offering price of $25 per share. Unfortunately, in some instances, pre-IPO investors who acquired their shares around 2013-2017 may not have been adequately informed of the complex and risky nature of NYC REIT. As a non-traded REIT, NYC REIT was both illiquid and costly. Costs and expenses for investors in non-traded REITs—including selling commissions and other expenses such as management fees— often add up to more than 10% of the entire amount invested. Such high fees act as an immediate drag on investment performance.

Formed in December 2013 as a Maryland corporation, NYC REIT is focused on ownership of a “portfolio of high-quality commercial real estate” in New York City. As of June 30, 2020, the Company owned eight properties, including 1.2 million rentable square feet acquired at an aggregate purchase price of $790.7 million, located throughout the five boroughs of New York City.

While the commercial real estate market in New York City undergoes severe distress amidst the ongoing COVID-19 pandemic, NYC REIT shares continue to underperform. Investors who acquired their shares during the 2013-2017 offering, when the Company was still structured as a non-traded REIT, now face substantial losses in excess of 80% of principal invested (exclusive of any distributions received to date). As some financial services industry research demonstrates, non-traded REITs are risky and speculative investments that are not suitable for inexperienced or risk averse investors. Unfortunately, because of their high-commission structure, some financial advisors may be improperly incentivized to unsuitably recommend a non-traded REIT, including in some cases recommending the investment without adequately explaining its many risk components.

The attorneys at Giarrusso Law Group LLC have significant experience in working with 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.