Worried About Your Investments in Carter Validus Mission Critical REIT II?

The NAV of the real estate portfolio was negatively impacted by a recent merger.

The Sonn Law Group is investigating allegations that brokers recommended investments in Carter Validus Mission Critical REIT II. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.

Investments in Carter Validus Mission Critical REIT IICarter Validus Mission Critical REIT II is a non-traded, publicly registered REIT that intends to employ a long-term, net lease strategy in order to help mitigate risk, provide greater certainty of rental income and maximize value for fund shareholders, according to its website.

In April 2019, Carter Validus Mission Critical REIT I and Carter Validus Mission Critical REIT II entered into a merger agreement, creating an entity valued at approximately $3.2 billion. The merger was completed in December 2019. At that time, the board of directors approved an estimated NAV of $8.65 per share for the REIT’s Class A, Class I, Class T, and Class T2 shares of common stock, as of October 31, 2019. The shares were originally sold for $10.00 per share.

Although the value of the real estate portfolio increased after the merger, the NAV was negatively impacted by transaction costs incurred from Carter Validus Mission Critical REIT I’s debt payoff and other merger-related costs, distributions in excess of earnings, and a change in the value of interest rate swaps. The NAV is the net asset value. Net asset value is the value of an entity’s assets minus the value of its liabilities.

The board reported adopted a new share repurchase program (SRP) in October 2019, prohibiting repurchases from exceeding 5% in 2020. This limits the repurchase amount to 1.25% per quarter. Unfortunately for investors, the repurchase limit for the first quarter of 2020 has already been met. 

Investors can buy shares in REITs, which in turn borrows money to make investments in multiple properties specific to a certain sector, such as retail, industrial, office, or multi-family residential apartments. REITs have specific risks associated with them that are not prevalent in traditional investments.

The following are risks that investors should consider:

Despite the risks associated with REITs, brokerage firms continue to push these investments because of the high commissions associated with their sale and creation. Firms typically earn between 7-10% in commission for selling a non-traded REIT, which is higher than most investment types.

Contact Us Today

The Sonn Law Group is currently investigating allegations that brokers recommended investments in Carter Validus Mission Critical REIT II. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.