The Parking REIT Investment Loss Options
Posted on Monday, September 27th, 2021 at 11:52 pm
Did you lose money investing in The Parking REIT (Real Estate Investment Trust), Inc.? Public records indicate that The Parking REIT is 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.
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 has been sold for as low as $5.01 per share.
The Parking REIT Inc. is a publicly registered non-traded REIT, which was formed when the MVP REIT and MVP REIT II merged in December 2017. The Parking REIT invests in parking lots and garages in the United States and overseas.
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 that 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.”
In August 2021, 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 and will purchase 1.55 million shares from Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., and Michael V. Shustek (collectively, the “Advisor”) 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.”
The Parking REIT is currently facing 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 until further notice, citing the reasoning as due to potential economic disruption caused by the COVID-19 pandemic. The CEO of The Parking REIT 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, 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.