Resource Real Estate Opportunity REIT II Merger Update

Resource Real Estate Opportunity REIT II Merger Update

The White Law Group continues to investigate potential securities claims involving broker dealers who may have improperly recommended Resource Real Estate Opportunity REIT II to investors.

Resource Real Estate Opportunity REIT II Inc., a publicly registered non-traded REIT, buys undervalued apartments located in “strong suburban markets to add value and generate income,” according to its website.

The REIT reportedly plans to acquire Resource Real Estate Opportunity REIT I and Resource Apartment REIT III Inc. in an upcoming  separate stock-for-stock merger. According to the company, the mergers will combine three portfolios of suburban apartment communities in markets with income and employment growth. 

Merger Risk Factors for Shareholders

According to the Form 10-Q filed on September 30, there are certain risks related to the merger that shareholders may need to consider.

It is possible that the global COVID-19 pandemic has adversely affected the value of REIT I ‘s and REIT III’s assets more than it has affected the value of the Company’s assets.

Failure to complete the Mergers could negatively impact the future business and financial results of the Company. If so, the company could be required, under certain circumstances, to pay to REIT I a termination fee of $22.990 million and up to $2 million as reimbursement for REIT I’s expenses and  to pay REIT III a termination fee of $3.12 million and up to $1 million as reimbursement for REIT III’s expenses.

The company also noted that the ownership positions of the stockholders will be diluted by the Mergers resulting in the “stockholders having an ownership stake in the Fully Combined Company that is smaller than their current stake in the Company.”

Upon completion of the Mergers, based on the number of shares of the Company common stock, the REIT I common stock and the REIT III common stock outstanding on June 30, 2020, continuing Company stockholders will own approximately 38.14% of the issued and outstanding shares of common stock of the Fully Combined Company.  

The Trouble with Non-Traded REITs

The trouble with non-traded REITs, like Resource Real Estate Opportunity REIT II, is that they are complex and inherently risky products.

Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses.

Lack of liquidity is often problematic for many investors.  Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale.

According to Central Trade and Transfer, a secondary market for non-traded REITs, shares of Resource Real Estate Opportunity REIT II recently sold for just $5.00 per share. The original offering price of the REIT was $10.00 per share. 

Filing a Complaint against your Brokerage Firm

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Resource Real Estate Opportunity REIT II,  please contact 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 Franklin, Tennessee. For more information on the firm, visit www.WhiteSecuritiesLaw.com.