Peakstone NYSE Listing Disappoints Shareholders

Peakstone Realty Trust (Griffin Realty Trust) Trades Far Below NAV

The White Law Group continues to investigate potential securities claims involving the liability that brokerage firms may have for improperly recommending Peakstone Realty Trust (formerly Griffin Realty Trust) to investors.  See: Griffin Realty Trust Plans Spin-off, Liquidation as NAV Declines

Peakstone Realty Trust (NYSE: PKST) hosted a webcast on April 20, to discuss their recent listing on the New York Stock Exchange and the “dramatic discount to net asset value” at which the stock has traded, according to the DI Wire.  

As previously reported, Griffin Realty Trust (formerly known as Griffin Capital Essential Asset REIT), a publicly registered non-traded REIT, has now changed its name to Peakstone Realty Trust and announced a one-for-nine reverse share split, on March 8, 2023.  

Investors were apparently excited about the opportunity for liquidity after Griffin suspended its redemptions but may have been disappointed at Peakstone’s trading price. After the 1 for 9 reverse stock split, the company estimated its Net Asset Value (NAV) at $66.87.  

Shares of PKST reportedly opened at $8 per share and closed at $11.65 per share on the first day of trading last week. Shares opened this morning at $36.80.  

According to Peakstone, the capital markets and the specific market for office properties have negatively changed since it last updated the NAV. 

Reverse Stock Split – What does it mean for Shareholders?  

A reverse stock split occurs when a company decreases the number of shares in order to increase the dollar value of the individual shares. In one example, if the company has $100,000 worth of outstanding shares, with 10,000 shares at $10 per share, they may elect to create 2,500 shares at $40 per share.   

Because the share price increases, it may look more attractive to investors, creating the perception that a company’s stock has increased in value. Or a company may do a reverse stock split so that its share price will appear similar to its competitors.  

Unfortunately, companies whose stock price has been decreasing for a while may execute a reverse stock split in an attempt to hide it. It could be a sign that the company is in poor financial health.  

The Trouble with Non-traded REITs     

The trouble with non-traded REITs is that they are complex and inherently risky products.       

Non-traded REITs are real estate investment trusts that are not traded on a stock exchange. These types of REITs are considered inherently risky for several reasons. 

Unlike publicly traded REITs, non-traded REITs are not listed on stock exchanges, which means that investors cannot easily sell their shares when they need to. Non-traded REITs often have limited redemption programs, which may require investors to wait for months or even years before they can liquidate their holdings. 

Non-traded REITs often rely on appraisals to determine the value of their properties. These appraisals may not accurately reflect the current market conditions or the actual value of the properties. 

Since non-traded REITs are not required to file regular financial reports with the Securities and Exchange Commission (SEC) it makes it difficult for investors to assess the performance and financial health of the REIT. 

They also often charge high fees to cover the costs of marketing, management, and other expenses. These fees can eat into investors’ returns and make it more difficult for them to achieve their investment objectives. 

Non-traded REITs may invest in a limited number of properties or in a particular geographic area, which increases the risk of losses if there is a downturn in that market.  

While non-traded REITs may offer higher yields compared to publicly traded REITs, they come with higher risks that investors should carefully consider before investing.  

Broker Due Diligence 

Broker dealers are required to inform clients of the risks associated with investment recommendations. They must ensure that those recommendations are suitable for the investor considering the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so may be held responsible for any losses.    

The Financial Industry Regulatory Authority (FINRA) provides regulatory services to the financial industry by licensing and regulating brokerage firms.  FINRA also operates the largest dispute resolution forum in the securities industry.  FINRA Dispute Resolution is the forum for almost all disputes between investors, brokerage firms and brokers.             

If you have suffered losses in  Peakstone Realty Trust (formerly Griffin Realty Trust), you may be able to recover your losses by filing a FINRA Dispute Resolution Claim.  Please contact The White Law Group at 888-637-5510 for a free consultation.       

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information on the firm, visit www.WhiteSecuritiesLaw.com.