MacKenzie Capital Management has close to $170 million in assets and has been purchasing distressed non-traded real estate investments trusts for decades. In an Aug. 9 email, it offered investors of Business Development Corporation of America (BDCA)
$2.50 per Share, which is two-thirds lower than its reported net asset values at the end of June of $7.43 per Share.
MacKenzie operates through MCM Advisers (an RIA) and is trying to sweet-talk investors. Robert Dixon, chief investment officer, wrote the letter. You can now get your cash from the Business Development Corporation of America, and regain control of your funds.
Haselkorn & Thibaut received calls over the past two years from numerous clients who purchased shares in non-traded real-estate investment trusts (Non-Traded REITs) or non-traded business growth companies (“BDCs”) during the period. Many of these clients bought Non-Traded Reits and BDCs in the period 2013-2016, with financial advisors promising them stable dividends, principal security, and liquidity within 1-3 years. These assurances never came to pass and many Non-Traded Reits and BDCs have experienced significant price per share declines over the past two years.
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Haselkorn & Thibaut has set up a toll-free number for BDCA investors that want to explore options to recover their losses. They can call 1-800-856-3352 or visit InvestmentFraudLawyers.com for a free consultation on recovering losses.
Problems with BDCA & Investment Fraud Lawsuits
For those who don’t know, Non-Traded REITs are securities that are not traded on a public stock exchange. Non-traded REITs are therefore illiquid. The REITs’ underlying collateral is income-producing residential and commercial real estate. The commissions earned on non-traded REITs is typically higher than the industry norm. The average commission generated by non-traded REITs is approximately 7%. Furthermore, the investments themselves can be subject to extreme volatility because of associated risk factors. Investors who have a long-term investment plan and are willing to take higher risks with their investments in non-traded REITs may be able to invest in these types of investments. Financial Advisors are motivated to recommend these speculative investment options because of the high commissions.
Business Development Companies (or BDCs) are closed-end investment firms that assist small businesses with their capital requirements. BDCs provide loans to small businesses, and they finance these loans with capital from investors. BDCs are often highly illiquid because they do not trade on any public exchange.
BDCs and non-Traded REITs have large internal expenses. These are commonly called middleman expenses. This dramatically lowers investors’ returns. These fees can range from 12% to 15% and reduce the return on investment. To offset these high internal expenses, Non-Traded REIT revenues and BDC revenues must remain high. Returns are affected if they do not. The non-traded Business Development Corporation of America (BDCA), a non-traded BDC, raised $1.9billion between 2011 and 2015. It was initially purchased at $10 per share. It claimed to pay a higher than 7% dividend. While BDCA still claims to be worth more than $7 per share, Mackenzie Capital, Registered Investment Advisor made a tender offer for the remaining shares of BDCA for $2.50 in August 2021. This was a significant discount from its market value. Moreover, the secondary trading price of BDCA shares is $5 per share. This information was obtained through Central Trade and Transfer’s auction process. Tender offer Mackenzie may have a negative impact on secondary trading value.
How to recover BDCA Losses
Investor losses have been hugely affected by BDCA. Investors have received a disguised income and now face capital losses. Financial advisors are legally and regulatory required to recommend investments that meet their clients’ objectives and needs. The Financial Advisors’ dealings with clients and sales practices are subject to supervision by the brokerage company they work for. If any of these obligations are violated, the customer could be entitled to recover investment losses. Brokerage firms are required to investigate the non-traded REITs and BDC issuers before recommending investments.
Haselkorn & Thibaut represents investors in all areas of investment litigation and arbitration on a contingency basis. They have over 45 years of experience has been a trial lawyer and has dealt with hundreds of securities cases involving a variety of products, strategies, and securities. Before he began representing investors, he was a partner in a national law company, representing some of the most prominent banks and brokerage companies in the world in securities matters. Contact Haselkorn & Thibaut, P.A. at 1-800-856-3352