Written by The White Law Group• December 7, 2017• 3:32 pm• Blog, Current Investigations

Griffin Capital Essential Asset REIT Urges Shareholders to Reject Tender

Investment Losses in Griffin Capital Essential Asset REIT

Did you lose money investing in Griffin Capital Essential Asset REIT? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Arbitration Claim against the brokerage firm that sold you the investment.

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The White Law Group continues to investigate potential securities fraud claims involving broker-dealers’ improper recommendation of high-risk non-traded REIT investments, like Griffin Capital Essential Asset REIT.

On December 4, 2017, the board of directors of Griffin Capital Essential Asset REIT, Inc. sent a letter to shareholders urging them to reject a third party tender offer.

Mackenzie Capital Management, LP’s extended a tender offer to purchase up to 1 million shares of their common stock at $6.89 per share.

The board notes that this tender offer price is below the board’s estimated NAV per share of $10.04, established in October 2017.

The board further noted that the REIT, under the share repurchase plan (SRP), had repurchased common shares up to the annual limit of 5.0% of the weighted average number of outstanding shares during the third quarter of 2017.

According to SEC filings, form 10-Q for the third quarter reveals that 104,999 common shares submitted to the SRP were not repurchased. The REIT noted that the SRP would resume in January 2018.

Risks of Non-traded REITs

Many investors are not fully aware of the problems and risks associated with Real estate investment trusts (REITs) before purchasing them.

REITs are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.

Brokers typically earn high commissions for selling REITs – as high as 15%. Unfortunately, in many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.

In addition to the high risks, non-traded REITs, like Griffin Capital Essential Asset REIT often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.

Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.

FINRA operates the largest securities dispute resolution forum in the United States, and has extensive experience in providing a fair, efficient and effective venue to handle a securities-related dispute.