Mahany Law, a national boutique law fraud recovery law firm, is investigating potential claims against stockbrokers who sold shares of Strategic Realty Trust, a popular nontraded Real Estate Investment Trust (REIT) once run by noted real estate investor Tony Thompson.
Strategic Realty Trust – once known as TNP Strategic Realty Trust – was formed in August of 2009 by Thomson. He ran the firm until ousted last year by the board. Like many REITs, shares were originally offered at $10.00 per share. As recently as last year, Thompson was telling investors that the REIT shares had increased in value by 6% to $10.60. Last week, however, investors learned that their shares were valued at just $7.11, a drop of almost 30%.
Although the trust owns 16 shopping centers, all but one of which are claimed to have appreciated in value, the REIT share somehow still managed to lose significant value.
The sudden drop in value illustrates one of the fundamental flaws in nontraded REITs; it is almost impossible to determine their true value. Why? Because there is no secondary market. Investors can easily determine the price of Apple or Ford shares, for example, by simply going on line for real time stock quotes. For nontraded REITs like Strategic Realty, however, investors are forced to accept the promoter and REIT management’s valuation.
Strategic Realty isn’t the only one in the dog house. Thompson was charged last September by the Financial Industry Regulatory Authority for violating the anti-fraud provisions of federal securities laws. He denied those allegations.
In April of 2015, Thompson was banned from the securities industry. FINRA determined that he “made material misrepresentations and omissions in the sale of private placement securities to investors.” The wholesaler for Thompson’s investment products, TNP Securities, was also barred.
We believe that few individual investors should invest in nontraded REITs. This is a bold statement but we have seen many older and retired folks wrongly placed in REIT investments; non-traded REITs. While institutional investors and the very wealthy can often ride out a long term investment, the average individual investor may need to access his or her money in an emergency or for retirement. That is difficult or impossible in nontraded REITs, some of which need to be held for 7 years or more or until there is a liquidity event.
If you lost money in TNP Strategic Realty Trust, another nontraded REIT or similar illiquid investment (such as a Tenant-in-Common / 1031 exchange) contact us immediately. For more information contact attorney Brian Mahany at or by telephone at (202) 800-9791. We also invite you to visit our Non-Traded REIT claims center post.
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