Earlier this summer another REIT served as a reminder why REITs can be so disastrous for investors. American Finance Trust Inc., (AFIN) is a publicly traded REIT listed on the Nasdaq. The company recently appears to have lost approximately $1 billion of its value.
According to a report released by investment bank Robert A. Stanger & Co. Inc., the trading performance of the AFIN shares shows a dramatic difference between the value assigned by the company and the trading value.
AFIN shares were trading at $14.80 with a market capitalization of about $1.6 billion. Last month, American Finance Trust published an “estimated per share” net asset value of $23.56. Five years ago, brokers sold AFIN at $25 per share. The decrease shows that in less than five years, AFIN is trading at 40.8% less than what brokers sold it for and 37.2% less than the company’s independent board said it was worth last month.
REITS Have History of Valuation Concerns
Non-traded REITS have a history of fluctuating valuations, promising value that is here today, gone tomorrow.
In the years prior to the 2008 stock market crash, brokers regularly represented that investing in non-traded REITs involved very little risk and promising annual returns of 6% to 7%.
But REIT’s such as Behringer Harvard, Cornerstone, and Inland saw their values plummet in 2009, 2010 and 2011; a result of taking on bad debt, paying high management fees, and overpaying for real estate.
Though new industry rules have addressed some concerns related to the transparency of what investors actually pay for REITs, American Finance Trust is just the latest example of the risk of investing in a REIT.
Have You Lost Money as a result of a REIT?
If you lost money in American Finance Trust or in any other REIT, contact an experienced investment fraud attorney today.
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