Benefit Street Partners Realty Trust Inc., a non-traded real estate investment trust (REIT), announced it is suspending its distribution reinvestment and stock purchase plan (DRIP), effective immediately. While the original pricing was $25.00/share, and current sponsor-stated value remains reported on investor account statements as $18.57/share. This suggests investors may have experienced a 25% decline in the value of their Benefit Street investment.
No reason was given for the suspension in a filing with the Securities and Exchange Commission(SEC). Still, other non-traded REITs recently enacted similar suspensions as a result of the impact of Covid-19.
In reality, Benefit Street has made some changes recently in response to Covid-19, but while the sponsor has not provided much in the way of transparency related to the impact of Covid-19, but to describe that it might have the potential impact that is not altogether ascertainable at this stage, there is a secondary market source (Central Trade and Transfer) where the pricing appears to have taken another downward adjustment. Current buyers are only paying in the $10.50/share to $11.15/share range, representing an over 50% loss for some investors.
Although the most recent sponsor stated value is $18.57/share, the most recent trading range reported by a secondary market source was between $13.75 and $13.94 share. See Central Trade and Transfer. This non-traded real estate investment trust (REIT) was initially offered at $25.00/share, and the sponsor is estimating $18.57/share since September 30, 2018. A previous tender offer by Mackenzie Realty Capital, Inc., a non-traded business development company (BDC) that offered $12.05/share for up to 500,000 shares.
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Investors may recall that it was formerly known as Realty Finance Trust appointed Benefit Street Partners as its advisor (replacing AR Global Investments, formerly AR Capital).
Suitability and Supervision Issues of Non-Traded REITS
Benefit Street Partners Trust REIT and other non-traded REITS sold by financial advisors have higher risks than traditional investments. They are part of working at independent broker-dealer firms. They are part of investment offered called Direct Participation Programs (DPPs) because they are not sold on the exchanges.
Also, Non-Traded REITs are usually higher risk because they are illiquid. They fall under the Securities and Exchange Commission (SEC) define as a “Reg D, “commonly called “private placements.”
Financial advisors are obligated by FINRA to make specific disclosures regarding the risks of private placements. Also, investors are supposed to have a high network or income.
Investors Seeking to Recover Benefit Street Partners Realty Trust REIT Losses
Most investors are unaware of their losses in non-traded REITs similar to Benefit Street Partners Realty Trust REIT until the investors try to sell their investments. This is because non-traded REITs are not sold/bought on the exchanges. Investors are forced to use secondary markets and often get paid pennies on the dollar.
To make matters worse, many non-traded REIT investors thought their investments were conservative and were counting on the income.
The typical way for investors to recover losses in these situations is to file an arbitration claim against the broker-dealer. In this process, an investor brings a claim to recover losses.
Although filing a claim is simple, it is best done by an attorney that specializes in investment fraud because there can be several issues involving the case that may be complicated.
Haselkorn and Thibaut, a national law firm, is currently offering a free consultation and case review of all investors. Investors can call their toll free number at 888-628-5590 or visit their website for more information.