Scrutiny is growing for Apple REITs – securities sold exclusively through David Lerner Associates. The products and Lerner have been in the hot seat for more than a month, after the Financial Industry Regulatory Authority (FINRA) filed a complaint stating that shares in Apple REITS had not been re-priced in years.
Meanwhile, Apple REIT investors have been under the impression that their shares were valued at the $11/share purchase price listed on their account statements. As it turns out, Lerner is now telling a different story. In a recent notice to Apple 7 and Apple 8 REIT investors, the value of the shares was $7.83 and $7.57 per share, respectively.
As reported June 15 by Investment News, FINRA stated in its complaint in May that it was misleading to investors not to reflect the updated value of the REITs on the David Lerner Associates Web site, especially in cases where the REITs pay dividends with principal and borrowed funds instead of operating income.
Accurate pricing of shares of illiquid, long-term non-traded REITs has been a bone of contention for nearly two years. Previously, the common practice in the brokerage industry was to list the share price on client account statements at par value, or the amount at which the broker/dealer sold it, with the product typically priced at $10 or $11 a share.
If you are concerned about your investment in Apple REITs, please contact us to tell your story.