SILA Realty Trust Liquidation – Secondary Sales Price Suggests Losses for Investors
Are you concerned about your investment in Sila Realty Trust Inc. (formerly known as Carter Validus Mission Critical REIT II)? If so, the securities attorneys at the White Law Group may be able to help you.
The White Law Group has handled numerous cases representing investors who suffered losses investing in high-risk non-traded REITs like Sila Realty Trust at the recommendation of their financial advisor.
Sila Realty Trust Inc., a non-traded, publicly registered REIT, invests in data centers and healthcare facilities, according to its website. The company changed its name on September 30, 2020.
According to the DI Wire on June 7, 2023, Sila Realty Trust Inc. announced that GenesisCare USA Inc., one of the REIT’s tenants, filed for Chapter 11 bankruptcy protection.
GenesisCare reportedly operates 17 radiation oncology and related use properties that are owned by Sila, among other operations. GenesisCare is seeking U.S. bankruptcy court approval to access already sourced debtor-in-possession financing to continue to operate its business in the near term, according to bankruptcy filings. GenesisCare notes that its plan for reorganization includes a sale of its U.S. business within a six-month period.
According to the article, the company’s lease obligations with Sila have not been included in any motions GenesisCare has filed, and Sila reports that GenesisCare has met its lease payment obligations due to the company through May 2023.
Sila Realty Trust – Unsolicited Tender Offer
On March 6, 2023, Sila’s board recommended in a Letter to Stockholders that they reject an unsolicited tender offer by CMG Partners and its affiliates, CMG Income Fund II LLC, CMG Liquidity Fund LLC and Blue River Capital LLC.
CMG is offering to purchase up to 500,000 Class A shares for $4.16 each, close to 50 percent less than the REIT’s most recent net asset value (NAV) per share of $8.22, announced in August 2022. CMG’s offer expired e April 12, 2023.
After Carter Validus Mission Critical REIT Inc. (CVMC REIT I) and CV REIT II merged in December 2019, they reportedly approved an estimated net asset value of $8.65 per share, calculated as of October 31, 2019.
The NAV has not changed much. Last March we reported a NAV of $8.20 per share, announced in July of 2021. This year the company estimates its NAV is $8.22 per share.
While the board recommends rejecting the offer, it also notes that there is a limited market for the Company’s common stock, and there can be no certainty regarding the long-term value of the Company’s common stock. Many non-traded REITs are admittedly struggling now due to inflation and rapidly rising interest rates.
According to Central Trade and Transfer, a secondary market for non-traded investments, shares of Sila Realty Trust have recently been sold for just $5.32 per share. Shares were originally offered for $10 per share.
Sila Realty Trust and the Risks of Investing in Non-Traded REITs
Non-traded REITs are complicated and often risky investments which should only be sold to high-net worth and sophisticated investors.
Aside from the risks of investing in non-traded REITs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation. Brokerage firms generally make between 7-10% for selling a non-traded REIT, which is far more than the typical commission for more traditional investment types. They are also illiquid, meaning they aren’t listed on any exchange and when you are ready to sell, there may not be a buyer. If there is a buyer, you may end up selling your shares at a loss.
FINRA, the regulator who oversees brokers and brokerage firms, continues to monitor the sale of non-traded REITs, in particular, the ways in which broker/dealers marketed and sold the products to investors. In many cases, broker-dealers marketed these investments as safe and secure.
Broker Due Diligence
Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.
Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.
Fortunately, FINRA does provide an arbitration forum for investors to resolve such disputes. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment, they may be found liable for investment losses through FINRA arbitration.
The FINRA attorneys at the White Law Group can help you with the arbitration process including evaluating the merits of your claim and determining whether you have a strong case for arbitration. Our attorneys will draft the statement of claim and represent you at the arbitration hearing, present evidence and make arguments on your behalf. They may be able to negotiate a settlement for you before going to arbitration.
Please contact The White Law Group at 1-888-637-5510 for a free consultation, to determine whether you may be able to recover investment losses incurred because of investing in Sila Realty Trust.
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 White Law Group, please visit our website at https://www.whitesecuritieslaw.com.
Tags: Carter Validus Mission Critical REIT II, Genesis Care USA, non-traded REITs, Sila Realty Trust, Tender offers Last modified: June 28, 2023