The Parking REIT Investment Loss Options

The Parking REIT

Did you lose money investing in The Parking REIT (Real Estate Investment Trust), Inc.? Public records indicate that The Parking REIT was an illiquid investment that has caused investors to suffer losses of 50-75% of their investment principal. A speculative and high-risk investment, The Parking REIT suspended all cash distributions and stock dividends. It is no longer a REIT, and it does not distribute funds to stockholders.

The Parking REIT changed its name to Mobile Infrastructure Corp. in 2021. Mobile Infrastructure is no longer distributing money to shareholders.

Shares of The Parking REIT originally sold for $25, so regrettably, for many investors, they will likely take significant losses when they sell. The Parking REIT was sold for as low as $5.01 per share. 

The Parking REIT Timeline

The Parking REIT Inc. was a publicly registered, non-traded REIT, which was formed when the MVP REIT and MVP REIT II merged in December 2017. The Parking REIT invested in parking lots and garages in the United States and overseas.

In 2018, The Parking REIT filed for a $100 million IPO and intended to list on Nasdaq with the trading name PARK. It suspended distributions and share repurchases for stockholders that same year. The Parking REIT later withdrew its IPO.

In April 2018, The Parking REIT did not file its yearly report for 2017.

In 2019, a former client filed a class-action lawsuit related to false and misleading statement related to the MVP REIT merger. 

In April 2020, the company sent a letter to investors stating that options to provide liquidity to shareholders on the stock exchange were not viable currently and that “there can be no assurance that the company will cause a liquidity event to occur in the near future or at all.” 

The company stated it “faces significant legal expenses related to pending lawsuits, an SEC investigation, and legal and consulting fees in connection with our exploration of potential strategic alternatives to provide liquidity to stockholders.”

Citing issues caused by the COVID-19 pandemic, The Parking REIT suspended distributions on its Series A and Series 1 Preferred Stock.

In July 2021, the Securities and Exchange Commission (SEC) filed fraud charges against The Parking REIT CEO Michael Schustek and his investment advisory firm Vestin Mortgage LLC alleging that he “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 (“VRTA”) and Vestin Realty Mortgage II (“VRTB”).” The SEC found that he drained $29 million from the two REITs to funnel money into The Parking REIT. It is also alleged that he directed the two REITs to enter into a series of “money losing transactions” that involved reselling the same six buildings. Additionally, it was found that he deceived the boards of directors of the two REITs and got them to give him $10 million. The complaint further alleges that he “repeatedly misled investors by causing VRTA and VRTB to make false and misleading statements in their public filings, which hid his self-dealing.”

In August 2021, Bombe Asset Management made a $125 million investment in The Parking REIT. Bombe Asset Management will buy 15% of the outstanding shares of common stock for $11.75 each. It will purchase 1.55 million shares from Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc. and Michael Shustek (CEO), and the Advisor’s affiliates. Bombe Asset Management is investing $90 million in property and parking assets as well as $35 million in cash. 

According to the statement, “The Advisor also surrendered its claim to 400,000 shares of common stock due to the Advisor from The Parking REIT on December 31, 2021, and contributed 175,000 shares of common stock to a settlement fund. Proceeds from the purchase of the shares from the settlement fund will be used for the benefit of the Company’s common stockholders. The settlement fund was created as part of the settlement of three class action lawsuits in which The Parking REIT was named as a defendant… a tender offer will commence promptly to purchase, subject to the offer conditions, up to 900,506 of The Parking REIT’s outstanding shares of common stock for $11.75 per share in cash. Offering materials to The Parking REIT’s stockholders describing the tender offer’s terms and conditions will be distributed accordingly.”

In July 2022, after a merger between Mortgage Infrastructure Trust and Mortgage Infrastructure Corporation was announced, Mackenzie Realty Capital launched a tender offer to buy The Parking REIT’s common stock shares for $7.25/share. It also offered to pay $700/share for 1 Preferred or Series A stock, a 30% reduction from its original price.

In November 2022, The Parking REIT distributed unclaimed funds in the Net Settlement Fund on a pro rata basis to Settlement Class Members who were eligible. 

The Parking REIT faces a class action lawsuit filed by shareholders that alleged that proxy statements MVP II filed with the SEC to get approval for the merger contained false and misleading statements. According to public records, a settlement fund will be created with 175,000 shares of common stock to settle three class action lawsuits, subject to court approval. 

Regrettably, for many investors, the board of Parking REIT suspended distributions, citing the reasoning as due to potential economic disruption caused by the COVID-19 pandemic. Michael Shustek is alleged to have conflicts of interest related to his ownership and management, which benefit him at the expense of shareholders. In August 2021, Michael Shustek resigned as a director and officer of The Parking REIT.

The Parking REIT allegedly paid significant commissions to brokers who sold the investment to their clients. 

The following firms allegedly sold The Parking REIT:

  • Accelerated Capital Group
  • Centaurus Financial, Inc.
  • Coastal Equities, Inc.
  • Crown Capital Securities, L.P.
  • Forest Securities, Inc.
  • Great Point Capital LLC
  • MVP American Securities
  • NI Advisors
  • Sandlapper Securities, LLC
  • Whitehall-Parker Securities, Inc.

According to public records, The Parking REIT was a “blind pool” that had no operating history and had not identified any investments it would make, which would not allow investors or advisors to evaluate the investments before buying them. Additionally, The Parking REIT disclosed substantial conflicts of interest, including those pertaining to compensation, investment opportunities, and management resources. The Parking REIT was also permitted to incur substantial debt, which further increased risk. 

Investors are no longer receiving distribution payments. However, they have no choice but to hold their investment and risk further losses because of the lack of liquidity of The Parking REIT.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.

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Author: Jeffrey Erez

The founder of Erez Law, Jeffrey Erez, focuses exclusively on securities arbitration and litigation. Mr. Erez passionately believes in representing aggrieved investors and obtaining justice for his clients through litigation.