Presidio Property Trust, formerly known as NetREIT, is focused on owning property outside of mainstream properties in locations largely ignored by institutional investors. This non-traded real estate investment trust (REIT) was initially sold for $10.00/share. However, an offer by Mackenzie Capital Management on June 4, 2018, was for $2.60 a share. This offer is over a 70% loss!
According to the offer letter, “Presidio Property Trust has an infinite life, and it has not said when it might liquidate. The REIT does not have a formal policy with respect to a stock repurchase program and typically restricts repurchases to hardship cases only.”
In the third quarter of 2017, it is believed that Presidio Property Trust f/k/a NetREIT suspended distributions. The Presidio Property Trust REIT’s stated current value based on the sponsor’s representations are reporting $5.41/share. Notwithstanding those estimates by the sponsor, the most recent trading range reported by a secondary market source was in the $2.89/share to $3.05/share range on Central Trade and Transfer. For buyers who paid at or near the original $10.00/share price level, or those accepting the recent tender offer, this could reflect a significant loss.
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Non-Traded REITs Problems
Most retail investments sold today have some redemption or market transparency. Examples would be stocks or mutual funds where investors can see the value of their investment and what the product is being offered and sold at.
Jason Haselkorn, Esq. A partner with Haselkorn & Thibaut (InvestmentFraudLawyers.com) commented that his office has received several calls from investors who have incurred losses in non-traded REIT investments, many of which are not represented properly at the point of sale, or investments that are the result of negligent supervision.
However, with real estate investment trusts “REIT” s, the value is often determined by the company because there is not a large public exchange or market to see the prices. Investors have to rely on either having the company redeem the investment or secondary market like Central Trade and Transfer.
This pricing issue creates enormous liquidity problems for investors. Besides, the risks are increased. As the old saying says, “Something is only worth as much as they can get for it, “many investors are forced to get pennies on the dollar for non-traded REITs.
What Can Investors Do Recover Losses?
There are a couple of options for investors that investors can do to out of non-traded REITs. Investors can:
- Try and redeem the non-traded REIT from the investment company, which may not accept it back.
- Sell the non-traded REIT on a secondary market, which will over you substantially less money than you paid.
- File a FINRA claim on the broker-dealer to attempt to recover losses.
If you invested in anything you are not sure about, you could contact an investment fraud lawyer or financial advisor. Haselkorn & Thibaut is offering all readers a free portfolio at 1 888-628-5590. There may be limited for you to recover your losses, so seek advice as soon as possible.
Robert Thomas has over 14 years experience in the investments on the institutional side of markets and has an “insider” view on the markets. In addition, he is an futures day trader that focuses on analyzing fundamentals, specifically earnings reports and technical levels. He has a Masters Degree in Business and Economics.