The Secondary Sales Price could indicate losses for Mackenzie Realty Capital shareholders
The White Law Group continues to investigate potential claims involving broker-dealers who may have improperly recommended Mackenzie Realty Capital to investors.
Mackenzie Realty Capital, Inc. and its affiliates are reportedly in the business of purchasing illiquid real estate securities, both in open market transactions and through tender offers.
According to filings with the SEC, in November 2020, Mackenzie Realty Capital Inc. shareholders voted to withdraw from the company’s election as a business development company in order to shift its investment focus to real estate.
The company is currently required to invest 70 percent of its portfolio in qualifying assets, principally by owning securities of eligible private companies. The board claims that by withdrawing the election it will open up significant opportunities for investment in real estate assets.
The company notes that this will allow greater access to capital and flexibility in raising capital for an investment strategy geared toward direct investment in real estate.
As we told you in May, at that time the company suspended its share repurchase program (SRP) due to market disruptions from the Covid-19 global pandemic stating that the value of assets “owned and sought by the company” have declined, in filings with the SEC.
According to Central Trade and Transfer, a secondary market for alternative, non-traded investments, shares of Mackenzie Realty Capital are currently listed to sell for around $7 per share. This could indicate losses for investors as the original offering price was $10 per share.
The Risks of Alternative Investments
Business Development Companies such as Mackenzie Realty Capital operate much like non-traded REITs (Real Estate Investment Trusts). Non-traded BDCs have many of the same problems for investors as non-traded REITs. They are high-risk, often have high commissions, and lack liquidity.
The White Law Group has represented a number of investors over the last few years in non-traded REITs and as well as BDCs– in large part because of their high commission structure and the possibility that unscrupulous financial advisors will push these products unsuitably to maximize their own commissions.
Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor in light of that particular investor’s age, investment experience, net worth, risk tolerance, investment objectives, and income. Firms that fail to perform adequate due diligence or that make unsuitable recommendations can be held responsible for investment losses in a FINRA arbitration claim.
If you are concerned about your investment in Mackenzie Realty Capital and would like to discuss your options, 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.
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