Resource REIT Inc. Liquidation – How to Recover Losses involving Resource REIT
The White Law Group continues to investigate potential securities claims involving broker dealers who may have improperly recommended Resource REIT Inc. (formerly known as Resource Real Estate Opportunity REIT II) to investors.
Resource REIT, 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 company, formerly known as Resource Real Estate Opportunity REIT II, Inc., reportedly completed its mergers with Resource Real Estate Opportunity REIT, Inc. and with Resource Apartment REIT III, Inc. on January 29, 2021.
According to a letter to shareholders, Mackenzie Realty Capital has extended a tender offer to purchase shares of the REIT for $10.75 per share. This comes just after the announcement that Resource REIT may enter a transaction with Blackstone Real Estate Income Trust. However, the transaction is subject to shareholder approval and other customary closing conditions. According to the letter, there is no guarantee that shareholders will approve the plan or that the company will be able to execute the transaction in a timely manner, or at all.
How Does a Merger Affect Shareholders?
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
The complexity of the merger required “significant management judgment,” in determining assets and liabilities, according to a filing with the SEC. The company estimated that the net asset value per share of the merged entity to be $9.06 per share as of January 28, 2021.
Illiquid Investments – Limited Share Redemptions to Death & Disability
According to filings with the SEC , the company’s share redemption program remains partially suspended and, until the Board determines otherwise, the Company will continue to only consider redemption requests in the case of stockholder’s death, qualifying disability, or confinement to a long-term care facility. While the share redemption program is partially suspended, the Company will only accept requests for Special Redemptions and all other requests will not be honored or retained, but will be cancelled with the ability to resubmit when, if ever, the share redemption program is fully resumed.
The trouble with non-traded REITs, like Resource REIT, Inc. 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 can suffer significant losses on sale.
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.
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 REIT Inc., 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 Seattle, Washington. For more information on the firm, visit www.WhiteSecuritiesLaw.com.
Tags: Resource Real Estate Opportunity REIT II investigation, Resource Real Estate Opportunity REIT II lawsuit, Resource Real Estate Opportunity REIT II liquidation, Resource Real Estate Opportunity REIT II merger, Resource Real Estate Opportunity REIT II sales, Resource Real Estate Opportunity REIT II secondary sales, Resource REIT II tender offer, Resource REIT Inc. class action, Resource REIT Inc. complaints, Resource REIT merger, Resource REIT redemptions, Resource reit sell, Resource REIT SRP Last modified: April 4, 2022