More Bad News for Investors of the Parking REIT?
Have you suffered losses investing in The Parking REIT (now known as Mobile Infrastructure Corp.)? If so, the securities attorneys at The White Law Group may be able to help you to recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment. Our firm has represented numerous investors in FINRA claims who lost money investing in the Parking REIT and other non-traded REITs.
The Parking REIT, a non-traded REIT formed in December 2017 by the merger of MVP REIT and MVP REIT II, invests primarily in parking lots and garages in the United States. The company changed its name last November to Mobile Infrastructure Corp. and no longer qualifies as a REIT so is no longer required to distribute any amounts to its stockholders.
Mackenzie Realty Capital reportedly launched another tender offer this week to purchase shares of the company for $7.25 per share of common stock, a deep decline from a previous tender offer price in March 2018 of $12.17 per share. The original offering price of the Parking REIT was $25 per share.
According to Mackenzie’s offer letter, although Mobile Infrastructure Corporation announced a merger agreement with Mobile Infrastructure Trust, there is no guarantee “if or when that transaction will be approved or closed, and no guarantee of liquidity.” In March 2020, the Corporation suspended ALL repurchases, even in the cases of a stockholder’s death.
Mackenzie has also offered to pay $700 per share of Series A or 1 Preferred Stock. (The original offering price for Preferred stock was $1,000, per share, according to the PPM,)
Parking REIT Exec Reportedly Charged with Fraud
According to the Securities and Exchange Commission on July 30 2021, the regulator charged an executive of the Parking REIT, and his wholly owned investment advisory firm, Vestin Mortgage LLC with fraud.
The SEC alleged that since at least 2012, the executive “fraudulently enriched himself and one of the REITs he controlled, The Parking REIT”, at the expense of two publicly traded REITs that he earlier had founded, Vestin Realty Mortgage I and Vestin Realty Mortgage II.
The executive allegedly funneled $29 million from Vestin Realty Mortgage I and Vestin Realty Mortgage II into The Parking REIT and then purportedly initiated “money-losing transactions in which the same six buildings were repeatedly re-sold”, all to allegedly benefit himself and The Parking REIT, according to the complaint.
The SEC alleged that the executive violated his fiduciary duties to the Vestin REITs including allegations that he made two separate securities transactions to get the companies to pay him almost $10 million. The executive was also allegedly charged with misleading investors by having the Vestin REITs make false and misleading statements in their public filings, which purportedly hid his alleged self-dealing.
The SEC’s complaint reportedly seeks disgorgement plus pre-judgment interest, penalties, permanent injunctions, and industry, penny stock, and officer and director bars against the executive. (To learn more see: Parking REIT Executive Allegedly Charged with Defrauding Investors)
Parking REIT Suspends Distributions & Delays NAV Calculation
In April 2020, the company suspended distributions paid on its Series A and Series 1 Preferred Stock, due to economic turmoil caused by the COVID-19 global pandemic. The company suspended distributions and share repurchases for holders of its common stock in 2018. (See: The Parking REIT: Negative Effects of Covid-19 Pandemic.)
According to reports on May 22, 2020, the REIT delayed calculating its net asset value per share, again noting financial impacts from the COVID-19 pandemic.
The White Law Group has been investigating the REIT since 2016 when it first announced that it would re-evaluate pursuing a listing on the NASDAQ Global Market, and consider other stockholder liquidity options. These are just a few of the problems the REIT has been faced with:
Class Action Lawsuit filed re MVP REIT merger
In March 2019, a stockholder reportedly filed a class action lawsuit in a Nevada federal court in regards to the proxy statements filed with the SEC to obtain shareholder approval for the merger with MVP REIT.
The complaint alleges the company disseminated proxy statements that contained false and misleading statements, and that the director defendants breached their fiduciary duties, and the proposed internalization transaction will unjustly enrich certain directors and officers of the company.
The complaint seeks a trial by jury; unspecified monetary damages, an order halting the company’s listing on NASDAQ, and the payment of reasonable attorneys’ fees and other expenses.
Investors are questioning several negative factors in regards to the internalization that were disclosed by the company in an SEC filing. There are reportedly existing potential conflicts of interest between the company and the manager, and compensation paid as a result of the internalization transactions.
Also, there are significant costs involved with completing the transactions contemplated by the contribution agreement, as well the substantial time and effort required to complete the internalization, and the related disruption to the company’s operations.
Further, consideration paid in the form of common stock will have a dilutive effect and will reduce the voting power and relative ownership percentage interests of current stockholders.
The Parking REIT Withdraws $100 Million IPO
According to SEC filings, The Parking REIT, Inc. withdrew its registration statement that was filed on October 5, 2018.
The company originally filed a preliminary prospectus with the SEC to raise up to $100 million in an initial public offering, but said that it “believes the withdrawal to be consistent with the public interest and the protection of investors.”
The REIT reportedly planned to use proceeds from the IPO to repay approximately $9.1 million in debt, and for general corporate and working capital purposes.
The Parking REIT Failed to file Financial Reports
In April 3, 2018, The Parking REIT was unable to file its annual report for the year ended December 31, 2017 due to an internal investigation arising from the audit committee’s receipt of allegations from an employee of MVP Realty Advisors, LLC (the external advisor to the Parking REIT), about possible wrongdoing by the Parking REIT’s chairman and chief executive officer.
How to Recover Investment Losses
Non-traded REITs, like The Parking REIT, are often complex and high-risk investments that are really only suitable for sophisticated investors.
It is the duty of the brokerage firm to perform due diligence on any investment and to ensure that the investment is suitable for a particular investor in light of that investor’s age, investment objectives, income, net worth, and investment experience.
Given the current risk of devaluation of these REITs, such investments are likely only suitable for wealthy and/or sophisticated investors who can properly evaluate the risks of the investment and afford substantial losses.
If you have suffered losses investing in The Parking REIT (now known as Mobile Infrastructure Corp.) and would like a free consultation with a securities attorney, please call The White Law Group at 1-888-637-5510.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. For more information on The White Law Group, visit www.whitesecuritieslaw.com.
Tags: Mobile Infrastructure Corp, MVP REIT II losses, MVP REIT NAV, Parking REIT NAV, Parking REIT value, The Parking REIT class action lawsuit, The Parking REIT distributions, The Parking REIT investigation, The Parking REIT investment losses, The Parking REIT lawsuit, The Parking REIT losses, The Parking REIT MVP REIT merger, the Parking REIT shareholders, The Parking REIT tender offer, vestin mortgage Last modified: July 22, 2022