Benefit Street Partners Realty Trust to Merge With Capstead Mortgage Corp.

Benefit Street Partners Realty Trust Investors May Be Looking At More Losses 

If you are an investor whose broker unsuitably recommended Benefit Street Partners Realty Trust, you may have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration claim to recover damages. 

On July 26, this publicly registered non-traded real estate investment trust (non-traded REIT) announced its merger with Capstead Mortgage Corporation. The combined company will be named Franklin BSP Realty Trust and is set to become the fourth biggest commercial mortgage REIT with a common stock that will trade on the New York Stock Exchange.

This merger could lead to more losses for Benefit Street Partners REIT investors who initially bought their shares at the offering price of $25/share. Central Trade and Transfer, which is the secondary market for alternative investments, reported that Benefit Street Partners Realty Trust recently sold at $11.25/share. Other events over the past year have also contributed to a drop in the non-traded REIT’s price.

Earlier this year, Comrit Investments 1, Limited Partnerships completed a tender offer to buy up to  2,500,000 shares of Benefit Street Partners REIT common stock, par value $0.01 per share for $10.02/share. 

This took place not long after the non-traded REIT turned down non-traded business development company MacKenzie Realty Capital Inc.’s offer to buy up to 500,000 shares of the non-traded REIT’s common stock at $12.05/ share.

In March 2020, Benefit Street Partners Realty Trust temporarily suspended its Distribution Reinvestment and Stock Purchase Plan, although it did resume later in the year. All of this was after 2017 when the non-traded REITs board assigned a net asset value (NAV) to its shares of $19.17/share.

Our REIT fraud attorneys Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) are speaking to investors that bought Benefit Street Partners REIT to determine whether their broker unsuitably recommended these investments to them.

Highly Risky, Illiquid, and Unsuitable for Retail Investors 

Benefit Street Partners REIT was established in 2012 to originate, acquire, and oversee a diversified portfolio that includes commercial real estate debt investments in the US, including over 70 loans and more than 70 CMBS investments. Managed by alternative asset manager, Benefit Street Partners, the non-traded REIT raised $786M from investors before it closed its offering in early 2016.

According to the Benefit Street Non-Traded REIT prospectus, this investment is considered significantly risky and should only be recommended to customers who can handle some volatility. This non-traded real estate investment trust is considered a long-term investment. Yet, there are brokers who may have marketed this investment as safe and income-generating, and also, they may not have fully apprised their customers of the risks involved.

Benefit Street Partners REIT, like other non-traded REITs, paid broker-dealers and their financial advisors higher commissions and fees than more conservative, safer investments. This could have provided firms with an added incentive to sell this investment to customers even when it wasn’t a suitable fit according to their investing profile, risk tolerance level, and financial goals. 

Experienced REIT Investment Law Firm

If you would like help determining whether you have grounds for a FINRA arbitration claim against your broker-dealer over your Benefit Street Partners Realty Trust losses, call SSEK Law Firm at (800) 259-9010 or contact us today to request your free, no-obligation case consultation.

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