Watermark Lodging Trust Acquired by Brookfield
Are you concerned about your investment in Watermark Lodging Trust, Inc. (fka Carey Watermark Investors 2 Inc. and Carey Watermark Investors)? If so, the securities attorneys at the White Law Group may be able to help you to recover your investment losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
Shareholders of Watermark Lodging Trust Inc., a publicly registered non-traded real estate investment trust, approved the proposed acquisition of the REIT by private real estate funds managed by Brookfield. The $3.8 billion transaction, announced in May 2022, allows Watermark Lodging Trust stockholders to receive cash consideration of $6.768 per Class A share and $6.699 per Class T share. The transaction reportedly closed around October 21, 2022.
Redemptions Remain Suspended, Tender off price indicates 50% loss
Carey Watermark Investors 1 and Carey Watermark Investors 2, two publicly registered non-traded REITs sponsored by W.P. Carey Inc. (NYSE: WPC), merged in October 2019, to create a hotel REIT, Watermark Lodging Trust. Unfortunately for investors, after the merger, the REIT declared its first post-merger net asset value (NAV) of $5.51 per Class A share and $5.45 per Class T share. Original shares were sold for $10 each indicating nearly a 50% loss.
Mackenzie Capital Management tendered shares of Watermark Lodging Trust for $5 per share after Watermark announced a merger agreement with Brookfield Real Estate Funds. The company’s distributions and redemptions have been paused since March 2020, according to the letter.
Watermark Lodging Trust Hotel Closings during Covid Pandemic
Watermark Lodging Trust, Inc., invested primarily in the lodging sector, “experienced significant cancellations” during the Covid-19 global pandemic, which “adversely affected the performance of the companies’ hotels in affected areas.”
The company was forced to close hotels and was generating no revenues while lockdown orders were in effect. According to SEC filings, the company noted that it has $277 million in debts scheduled to mature in 2020, the debts are nonrecourse and some feature extension options. Watermark reported if it is unable to repay, refinance, or extend these loans, foreclosure of the underlying hotels is a possibility, further noting that the company may seek to give properties back to the lenders.
On June 30, 2020, the Board of Directors determined that the current suspension of the Company’s redemption program will remain in effect until the board determines to lift the suspension. As of December 2020, all redemptions were suspended.
Non-traded REITs are generally complex, high-risk investments and not suitable for every investor. They are also illiquid, meaning they are not traded on any market. Often investors find themselves in the situation of being unable to sell the investment when they are ready. If they are able to find a buyer, it is often at a reduced price.
Free Consultation with Securities Attorneys
If you are concerned about your investment in Watermark Lodging Trust (fka Carey Watermark Investors I and II), the White Law Group may be able to help you. For a free consultation with a securities attorney, please call 888-637-5510.
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 and its representation of investors in FINRA arbitration claims, visit http://whitesecuritieslaw.com.
