Written by The White Law Group• July 23, 2024• 10:55 am• Blog, Investment Loss Recovery

CIM Real Estate Finance Trust: Decline in Value

CIM Real Estate Finance Trust Liquidation, featured by Top Securities Fraud Attorneys, The White Law Group

CIM Real Estate Finance Trust: Tender Offer Price well below NAV

The White Law Group continues to investigate potential securities claims involving CIM Real Estate Finance Trust (formerly known as Cole Credit Property Trust IV (CCPT IV). The securities attorneys at The White Law Group may be able to help you to recover your losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

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Comrit Investments 1 LP, an investment fund based in Tel Aviv, has filed with the U.S. Securities and Exchange Commission to initiate an unsolicited tender offer to buy shares of CIM Real Estate Finance Trust Inc., a publicly registered non-traded real estate investment trust.

The company, in September 2023, extended a similar unsolicited tender offer for shares of the REIT. That previous offer aimed to purchase up to 22 million shares of CIM REIT at $4.21 per share.

In its current offer, Comrit proposes to buy up to 15.3 million shares of common stock at $2.43 per share. Comrit highlighted in its letter to shareholders that, although the REIT has an active share redemption program, redemptions under this program are typically limited each quarter to about 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid.

As of May 6, 2024, Comrit and its affiliates owned approximately 7 million shares of CIM REIT’s common stock, representing about 1.6% of the total common stock

Secondary Sales Price $3.89 per Share

According to a filing with the SEC, on September 5, 2023, Comrit Investments 1 LP, a Tel Aviv-based investment fund, extended an unsolicited tender offer to purchase up to 22 million shares of CIM Real Estate Finance Trust Inc., for $4.21 per share. This may indicate significant losses for investors.

According to Lodas Markets, a secondary market for non-traded investments, this week shares of CIM are selling for $3.89 per share.

Declining Net Asset Value (NAV)

According to filings with the SEC, the REIT’s NAV continues to decline. The board has reportedly declared net asset value (NAV) per share for CIM REIT was estimated at $6.09 on February 29 2023. Previously the REIT’s shares were valued at $7.20 per share as of March 31, 2022, and shares originally sold for $10.00 each.

According to filings with the SEC, CIM has sold the remaining property in its $1.3 billion sale of 81 open-air shopping centers to The Necessity Retail REIT Inc. (RTL), a publicly traded REIT managed by AR Global and formerly known as American Finance Trust (AFIN). The total portfolio sale price included up to $1.27 billion in cash, $53.4 million in Necessity Retail REIT common stock, and additional consideration based on certain performance measures of the sites during a 180-day period post-closing.

Lack of Liquidity – A Risk of Non-Traded REITs

Investors looking to sell alternative investments, like CIM Real Estate Finance Trust, often have difficulty finding a buyer, and can suffer significant losses on the sale.

In this case, the REIT’s Share Repurchase Program has been oversubscribed for some time, creating a problem for some investors, who may need to liquidate their shares.

Unsuitable Investment Recommendations

Your financial advisor has a responsibility to perform due diligence on any investment before recommending it to you. If your advisor unsuitably recommended CIM Real Estate Finance Trust and you lost money, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claims against the brokerage firm that sold you the investment.

The Financial Industry Regulatory Authority (FINRA) provides an arbitration forum for investors to resolve disputes with their brokerage firm. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.

Class Action vs. Individual FINRA Arbitration Lawsuit

People often wonder whether a large class action lawsuit is a better litigation option for them than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.