Hartman vREIT XXI, Inc. Suspends Distributions
According to a quarterly filing with the Securities and Exchange Commission in December, there is reportedly substantial doubt that the company can continue as a “going concern,” due to revolving credit loan and term loan having maturity dates less than twelve months from the issuance of its consolidated financial statements.
Now the company is suspending distributions indefiintely due to rising interest rates, according to a letter to shareholders on February 1, 2023.
The White Law Group continues to investigate potential securities claims involving broker dealers who may have unsuitably recommended Hartman vREIT XXI Inc. to its clients. Many non-traded REITs may be struggling due to rising interest rates. See Non-traded REITs “Liquidity Issue”.
The REIT reportedly has two revolving credit loans totaling $55 million that mature in March 2023 and a $2.41 million term loan that is also due to mature in March.
The company said if its unable to meet its debt service obligations that the lenders may pursue foreclosure, which would have a material adverse effect on the company’s financial condition, ability to meet its financial obligations, ability to operate its business and meet its investment objectives, and ability to pay distributions to its stockholders.
Effects of Mergers on Shareholders
Hartman vREIT XXI and an affiliated non-traded REIT Hartman Short Term Income Properties XX inc. recently merged Hartman XX into Hartman vREIT XXI, with Hartman vREIT XXI as the surviving entity. A separate merger closed in October 2020 involving three Hartman REITs, where Hartman Short Term Income Properties XX Inc. (Hartman XX) was the surviving entity.
These mergers may cause much confusion for investors, who are left wondering what their investment is really worth.
Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.
Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses.
Non-Traded REITs are High-risk Investments
Non-traded REITs are complex and high-risk investments for several reasons. First, 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 a higher sales commissions and fees than these other products.
Further, non-traded REITs are generally illiquid, severely limiting the investor’s ability to access funds should the need arise. According to Central Trade and Transfer, a secondary market for non-traded REITs, Hartman vREIT XXI was recently listed for sale at $5.30 per share. This may indicate losses for investors as the original offering price was $10.00 per share.
According to the company’s redemption plan, if you want to redeem your shares of Hartman vREIT XXI you have to wait three years, and shareholders with “death or disability” are priortized. To learn more about investing in non-traded REITs, please see:
If you suffered losses investing in a Hartman vREIT XXI or another Hartman REIT you may be able to recover your losses through FINRA arbitration. Please call the securities attorneys of 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.
The firm represents investors in FINRA arbitration claims throughout the country. For more information on the firm, visit https://www.whitesecuritieslaw.com.Tags: going concern, Hartman Short Term Income Properties XX, Hartman XX, Hartman vREIT XXI buy back, Hartman vREIT XXI complaints, Hartman vREIT XXI investigation, Hartman vREIT XXI lawsuit, Hartman vREIT XXI liquidation, Hartman vREIT XXI losses, Hartman vREIT XXI merger, Hartman vREIT XXI secondary sales, Hartman vREIT XXI tender offer, Hartman vREIT XXI value Last modified: February 9, 2023