Recent Comrit Letter to NYC REIT Board Highlights Continued Underperformance
New York City REIT, Inc. (NYC REIT, or the Company) (NYSE: NYC), formerly known as American Realty Capital New York City REIT Inc., was previously structured as a non-traded real estate investment trust (REIT) sponsored by AR Global Investments. Headquartered in New York City, the Company was formed in 2013 and invests in commercial properties located within the five boroughs of New York City, particularly Manhattan. NYC REIT, which went public in August 2020, has been plagued by underwhelming investment performance, especially since the Covid-19 pandemic decimated demand for urban commercial real estate. As a result, pre-IPO investors in NYC REIT may have suffered sizeable unrealized losses on their initial investment.
As a publicly registered non-traded REIT, NYC REIT was sold by numerous broker-dealers from 2013 through 2017 at an offering price of $25 per share. On August 18, 2020, class A shares of NYC REIT began trading publicly on the New York Stock Exchange. Unfortunately for investors, NYC REIT shares lost approximately 40% of their value following the first day of trading, having opened at $30 per share and closing at $17.60 per share. As of this writing, shares of NYC REIT are currently trading under $7 per share. When accounting for the Company’s pre-IPO 2.43 to 1 reverse stock split, shares of NYC REIT are only trading under $3 per share on a pre-split basis.
The Company’s lackluster stock performance has presented a challenge to retail investors who purchased shares at or near the original offering price, an issue highlighted by certain third-party real estate investors such as Comrit Investments 1 LP (Comrit). Comrit recently issued an open letter to NYC REIT’s board regarding Comrit’s nomination of an independent board candidate, to be voted on at the 2022 annual stockholders meeting. The letter outlines several concerns about NYC REIT including “the Company’s troubling governance, stock price underperformance and trading price discount to Net Asset Value.”
As a result of a significant decline in stock price, some investors in NYC REIT who acquired their shares prior to the public listing may have incurred outsized unrealized losses, exclusive of dividends or other distributions. In certain instances, some investors who bought NYC REIT shares on the recommendation of a financial advisor may have been uninformed of the complex nature of the investment and its many risks, including its high up-front commissions and fees as well as its illiquid nature as a non-traded investment product. Making matters worse, the stock’s rapid decline in price after the public listing has precluded some investors hoping to recover some of their initial losses.
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 at (201) 771-1115 or info@gialawgroup.com for a no-cost, confidential consultation.
