InPoint Commercial Real Estate Income: Tender Offer Price Suggest Losses for Investors
The White Law Group, securities fraud attorneys, continue to investigate potential securities claims involving broker dealers who may have improperly recommended InPoint Commercial Real Estate Income to investors.
According to a letter to InPoint Commercial Real Estate Income stockholders on September 8, 2023, an affiliate of Mackenzie Capital Management, LP, has extended a mini-tender offer to purchase shares of InPoint at the low price of $5.00 per share.
The letter indicates that the board of directors of the non-traded REIT recommends that stockholders ignore the offer, viewing it as an “opportunistic attempt to purchase your shares.”
The Mackenzie offer price of $5.00 per share is approximately 71% lower than the InPoint’s most recent estimated net asset values of Class P, A, T, D and I common stock of ($17.38, $17.43, $17.48, $17.42 and $17.42 per share, respectively) as of July 31, 2023, according to the letter.
Unfortunately for investors, the commercial mortgage non-traded REIT, announced the company has suspended its continuous public offering and share repurchase plan as of Feb. 10, 2023, according to an 8-K filing with the SEC.
The company said the suspension was due to the pace of fundraising in their current public offering and the amount of monthly redemption requests, which are currently more than its fundraising.
The primary offering, share repurchase plan, and distribution reinvestment plan will reportedly remain suspended until further notice. InPoint noted it plans to evaluate strategic alternatives available to the company.
In 2020, the board suspended the company’s public offering, share repurchase plan, distributions, and distribution reinvestment plan during the COVID-19 pandemic, as we previously reported.
InPoint Commercial REIT is just one of several non-traded REITs that have halted redemptions in the past few months, possibly due to the rising interest rates. See Starwood Real Estate Income Trust Limits Redemptions and Blackstone REIT (BREIT) Limits Redemptions
Risks of Non-Traded REITs
The trouble with non-traded REITs is that they are complex and inherently risky products. Lack of liquidity is often problematic for many investors. Investors looking to sell often have difficulty finding a buyer, and when they do, can suffer significant losses on the sale.
To learn more, see: Non-traded REITs “Liquidity Issue”
Further, the investment itself is unsuitably risky because it is dependent on the overall health of specific sectors of the economy. Non-traded REITs are often less regulated than other types of investments (i.e., mutual funds, stocks, etc.) and generally pay higher sales commissions and fees than these other products.
Recovery of Investment Losses
The White Law Group is investigating FINRA arbitration claims involving broker dealers who may have improperly recommended mortgage REITs to investors.
Brokerage firms are required to perform due diligence on any investment they recommend, including mortgage REITs. They must ensure that the investment is suitable for a particular investor in light of that investor’s age, investment objectives, income, net worth, and investment experience. Given the current risk of devaluation of these REITs, such investments are likely only suitable for wealthy and/or sophisticated investors.
If you have suffered losses in Inland Commercial Real Estate Income Inc., please call the securities attorneys of The White Law Group at (888)637-5510 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington
For more information on the firm, please visit https://whitesecuritieslaw.com.
Tags: InPoint Commercial Real Estate Income, non-traded REITs Last modified: September 13, 2023