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Griffin Realty Trust: REIT Announces Separation, Liquidation
Griffin Realty Trust, a publicly registered and non-traded real estate investment trust (REIT), is a complex, risky investment product that may not be suitable for inexperienced retail investors. If your financial advisor represented Griffin Realty Trust as a conservative, short-term and/or liquid investment, you may be entitled to recover damages.
What Is Griffin Realty Trust?
Previously known as Griffin Capital Essential Asset REIT, Griffin Realty Trust is a publicly registered, non-traded real estate investment trust. Its website describes the REIT as a multi-billion-dollar company that owns and operates “a diversified portfolio of strategically-located, high-quality, business-essential office and industrial properties that are primarily net leased to creditworthy and nationally-recognized, single tenants.”
Griffin Realty Trust’s portfolio, currently valued at $4.7 billion, includes 80 properties generating $249 million in in-place annual rent. Seventy-seven percent of these properties are office space, while 23% are industrial space. The portfolio enjoys 95.2% occupancy, according to the REIT’s website. It owns buildings in California, Arizona, Texas, Illinois, Iowa, Pennsylvania, Ohio, Colorado, and other states.
Headquartered in El Segundo, California, Griffin Realty Trust uses a net lease approach to its investments. As Investopedia explains, net lease “refers to a contractual agreement where a lessee pays a portion or all of the taxes, insurance fees, and maintenance costs for a property in addition to rent.” In other words, tenants (generally) pay the costs associated with a rental property, easing the landlord’s obligation to deal with various expenses.
What Are the Risks of Non-Traded REITs?
As a non-traded REIT, Griffin Realty Trust is not traded on securities exchanges. It is subject to the risks all non-traded REITs are subject to, including lengthy periods of illiquidity and the lack of any guarantee that investors will receive distributions. As FINRA warned investors in a 2016 investor alert, non-traded REITs like Griffin Realty Trust may be illiquid for eight years or longer and are “rarely, if ever, suitable for short-term investors.”
Is Griffin Realty Trust a Risky Investment?
Griffin Capital Essential Asset REIT’s prospectus describes the product as a risky investment. “An investment in our shares of common stock involves significant risks and is only suitable for persons who have adequate financial means, desire a relatively long-term investment and will not need liquidity from their investment,” it states. “Initially, there will be no public market for our shares and we cannot assure you that one will develop, which means that it may be difficult for you to sell your shares.”
According to the prospectus, the REIT is not suitable for investors seeking liquidity, guaranteed income, or a short-term investment. The document lays out additional suitability standards, including a minimum net worth of $250,000 or a gross annual income of at least $70,000 and a net worth of at least $70,000.
Has Griffin Realty Trust’s Value Declined?
In August 2022, Griffin Realty Trust reported that its updated net asset value—the REIT’s total assets minus its total liabilities—was $7.42/share, down from $9.10/share the previous year. According to a report by The DI Wire, the company attributed that decline to declining office property values, noting that on the other hand its industrial properties had increased in value. “Office properties continue to be negatively impacted by pandemic-related work-from-home trends,” Griffin Realty said in a statement, “while industrial assets continue to benefit from a number of favorable market dynamics, which have further increased over the course of the pandemic.”
Why Is Griffin Realty Spinning off Its Properties?
Griffin Realty Trust announced in August 2022 that it will undertake a “strategic monetization process.” According to the company’s press release, this process will involve “spinning off a new public company that will own a curated portfolio of primarily industrial assets, as well as certain office assets, listing that company’s shares on a national exchange, and providing stockholders with freely tradeable shares in this new public company.” Once it completes this process, the trust will “sell its remaining portfolio of primarily office assets over time and distribute net proceeds to stockholders.” The final step after this will be to “fully liquidate and cease operations.”
“We are pleased to announce this strategic monetization process, and look forward to executing this plan over the coming months,” Griffin Realty’s president and CEO said in a statement about the announcement. “Under the guidance of our financial advisors, we have determined that spinning off a portfolio of primarily industrial properties, as well as certain office properties, into a public company and liquidating the remaining assets over time as market conditions dictate will enable us to provide stockholders with the optimal combination of liquidity and value maximization in light of current real estate and capital market conditions.”
Contact Carlson Law to Discuss Your Case
Carlson Law represents investors involved in claims against financial advisors and investment firms throughout the United States. If you or a loved one have suffered losses investing with Griffin Realty Trust, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.