Soreide Law Group is evaluating possible claims against brokers or advisers for selling investors a risky investment, The Parking REIT, Inc. (Las Vegas, Nevada) – a publicly registered, non-listed real estate investment trust (REIT). Evidently, The Parking REIT, managed by MVP Realty Advisors, LLC, has declared in March 2018 that it would suspend stock dividends and cash distributions to shareholders.
Formerly known as MVP REIT II, the Parking REIT came to be through the December 15, 2017 merger of its wholly owned subsidiary, MVP Merger Sub, LLC, with MVP REIT, Inc. (known as “REIT I”). As a result of the merger, the company called itself The Parking REIT, Inc. Notably, the Parking REIT solely invests in facilities and parking structures (44 in total within the United States and Canada). Evidently, Mike Shustek, who is the company’s Chief Executive Officer and Chairman of the board of directors, claims that its model provides “tremendous upside opportunities” and that the merger provides “greater value for stockholders.”
The Parking REIT Stops Paying Investors’ Dividends To Preserve Capital
However, with the Board of Directors approving of a suspension, shareholders are questioning the value of the investment. Not only that, but their questioning the brokers’ recommendations. Supposedly, the Parking REIT board reasoned that suspending distributions was necessary to preserve capital so that it could sustain its operating liquidity. Also, the board rationalized the decision by referring to its upcoming purchase of Honolulu, Hawaii-based Marks Garage. Additionally, the board of directors suspended its share repurchase plan on June 28, 2018 so that it could “further its business operations.”
While it is possible that at some point the board may reinstate the share repurchase plan, the company made clear that there are no guarantees that it will ever occur. Furthermore, the December 2018 Newsletter referenced that the company may one day be listed on a national stock exchange, which it indicated would provide shareholders the ability to redeem shares. Yet, the company again made clear that there were no guarantees that this would even happen. Indeed, Michael Shustek has actually gone in the opposite direction in the past. Specifically, he caused another real-estate company, Vestin Realty Mortgage II, to be delisted to alleviate administrative burdens and expenses..
McKenzie Group Makes Tender Offer To Buy The Parking REIT At Less Than Half Of Original Share Price
Shares of the Parking REIT originally sold for $25.00 per share. However, The McKenzie group made a tender offer of merely $12.17 per share to buy the company, prompting the Parking REIT to steer customers away from liquidating to avoid taking a more than 50% loss. Therefore, in essence, investors are unable to liquidate their shares because The Parking REIT is an illiquid investment, and they are denied dividends because The Parking REIT wants to preserve capital.
Most importantly, these investments aren’t for novice investors, those who need liquidity, or those wanting to invest conservatively. Also, It is not uncommon for brokers to breeze through their disclosures about REIT risks. Actually, at times, brokers focus so intensely on the higher historical rates of returns on REITs to induce customers’ purchases. Some brokers go as far as failing to disclose risks to investors while unreasonably emphasizing the benefits. This typically happens, in part, because brokers make more in commissions or fees by selling products including The Parking REIT.
Evidently, Parking REIT has been sold by brokerage firms including NI Advisors, Whitehall-Parker Securities, MVP American Securities, Sandlapper Securities, LLC, Great Point Capital LLC, Coastal Equities, Inc., Crown Capital Securities, L.P., Accelerated Capital Group, Forest Securities, Inc. and Centaurus Financial Group.
Did A Broker Inappropriately Sell You The Parking REIT?
If you have experienced losses by investing in The Parking REIT or MVP REIT, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represent clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.