In August 2019, a proposed merger of Steadfast Apartment REIT (STAR), Steadfast Apartment REIT III (STAR III), and Steadfast Income REIT (SIR) was announced with a proposed closing anticipated in the first quarter of 2020. The Steadfast Apartment REIT (STAR) stated current value based on the sponsor representations is reporting $15.84/share. Notwithstanding those estimates by the sponsor, the most recent trading range reported by a secondary market source was in the $12.50/share to $12.77/share range.
What is Steadfast REIT?
Steadfast Apartment REIT III is a real estate investment fund formed to acquire and operate a variety of multi-institutional residential communities in a good location and institutional quality in targeted markets throughout the United States that have demonstrated high levels of occupancy and income across market cycles.
REIT III, Inc sponsor steadfast Apartment. Steadfast REIT Investments, LLC, a subsidiary of Steadfast, an Orange County-based group of real estate investment subsidiaries and operating companies acquiring, developing, and managing real estate in the United States and Mexico.
The Steadfast Income REIT (SIR) started current value based on sponsor’s representations are reporting $9.40/share. Notwithstanding those current estimates by the sponsor, the most recent trading range reported by a secondary market source was in the $6.75/share to $6.86/share range according to Central Trade and Transfer. For buyers who paid at or near the original share price level for one of these REIT investments, this could reflect a loss.
Many investors are upset and try to recover their losses. Matthew Thibaut, a Partner at Haselkorn and Thibaut (InvestmentFraudLawyers.com), said, “We have received countless calls from investors that have non-traded REITs. Many were not represented at the point of sale properly.”
Steadfast REIT Merger
The management of Steadfast REIT is very optimistic about the merger of the REITs.
“We believe the strategic merger of these three highly complementary portfolios with similar investment strategies will create an enhanced and diversified portfolio, concentrated in high growth markets,” said Rodney F. Emery, Chairman of STAR, SIR, and STAR III. “We believe the enhanced size, scale, and prominence of the combined portfolio will greatly improve our access to attractive capital sources, which can be used to drive future growth opportunities and potentially deliver enhanced liquidity options to stockholders.” “This transaction would allow each company’s stockholders to participate in the potential benefits of a larger, stronger combined company,” said Ella Neyland, President of STAR, SIR, and STAR III. “We look forward to pursuing additional value creation opportunities as a stronger company with increased cash flow, improved diversification, and an improved balance sheet.”
However, industry experts are still not sure it solves the problem with the decline in value for investors that try to liquidate their shares and pricing transparency. This is a widespread problem with non-traded REITs. Most financial advisors have their clients invest in ETF REITS that allow investors to buy or sell them on the exchanges.
Haselkorn & Thibaut, a national investment fraud law firm, is offering free case consultations for investors. They can be reached by calling +1 888-628-5590 or visiting their website.