According to InvestmentNews, “Necessity retail: Now is the time!” was uttered by none other than Tony Thompson, creator and former CEO of Strategic Realty Trust, a well known nontraded REIT. Thompson made these remarks to stockbrokers after telling them that they could still bring in investors at $10.00 per share even though he valued the REIT at $10.60. Now we know that Stategic Realty is really worth around $7.11 per share, a loss of 29%!
Thompson’s wild claims are part of the problem of nontraded REITs, they are so illiquid that it is difficult to know what they are actually worth.
One stockbroker commented on last week’s news reports about Strategic Realty and Thompson as follows: “I remember one of his wholesalers presenting to my firm. The guy got so angry with me when I asked the following in a room: How can you pay a 7% yield when you are buying overpriced, high vacancy properties with low cap rates? If you offered a 2.5% yield with a goal of improving occupancy and hopefully selling the portfolio at a higher price, fine. That’s a potentially attractive total return story. But you can’t pay 7% when if you’re lucky you are earning 5% (or whatever it was at that time).
Another said, “Non traded REITs have been designed and sold by the sleazy and really greedy to the naive and slightly greedy.” While we don’t agree that seeking stable returns makes one “slightly greedy,” we certainly agree that nontraded REITs are often sold by sleazy stockbrokers looking for high commissions.
If you lost money in TNP Strategic Realty Trust or some other nontraded REIT, you may have a claim for your losses against the stockbroker or brokerage firm who solicited the investment. We handle cases against stockbrokers, investment advisors and brokerage firms are usually handled on a contingent fee basis meaning no legal fees money unless we win and collect your money.
For more information, contact John Chapman at Chapman Law LLC. Our team of REIT fraud lawyers have helped dozens of people get back their hard earned money. John can be reached at 877-410-8172.