NYC REIT is one of the many real estate investment trusts to lose substantial principle value this year. The New York City REIT from AR Global was a non-traded Real Estate Investment Trust — a particularly risky investment. Non-traded REITs don’t have to report as much information about their business to the SEC, making it trickier for investors and brokers to assess their value. Financial advisers have a duty to know that this highly speculative investment wouldn’t be suitable for clients with conservative investment goals.

The New York City REIT owns commercial real estate. Brokers often touted NYC REIT as a way to invest in property throughout New York City’s five boroughs. In 2015, the REIT — originally called the American Realty Capital New York City REIT — raised $772 million from investors at $25 per share. Unfortunately, these investors may not have been accredited, and therefore should never have been able to purchase these securities. In August 2020, the ARC NYC REIT decided to go public on the New York Stock Exchange. During the initial public offering (IPO), the shares lost 44% of their value. Since then, their decline in value has continued, and by November 2020, NYC REIT shares had declined to less than $10 per share. 

REITs that own commercial real estate have had a bad year. Demand for office space has plummeted as more employees have started working from home. The Wall Street Journal reported that NYC’s four largest real-estate investment trusts have lost 54% of their value, while the REIT market as a whole lost 35%. Although office workers in Manhattan can legally return to their offices, “Seeking Alpha” reports that as of November 2020, office occupancy in Manhattan stands at less than 15%.  

Some experts speculate that the commercial real estate market will never recover from the 2020 COVID-19 crisis. Investors who want to get out of REITs may find that their broker did not provide adequate information about their investment. REITs are typically illiquid, long-term investments, and it can be difficult to get cash out once investors change their minds. If you feel you did not have enough information when you purchased a share of New York City REIT, you should reach out to one of the experienced securities attorneys at Fitapelli Kurta. Call (212) 658-1500 or email info@fkesq.com for a free consultation. 

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