The Parking REIT Lawsuit Investigation

The Parking REIT is a non-traded real estate investment trust (REIT) formed in December of 2017 by the merger between MVP REIT and MVP REIT II, which changed its name to The Parking REIT in December 2017. This REIT invests mainly in U.S.-based parking lots and garages.

In March of 2018, The Parking REIT announced a suspension of the REIT’s cash distributions and stock dividends. Soon after this announcement, Mackenzie Realty Capital extended a tender offer to purchase Parking REIT shares for $12.17 per share. This constituted a 48% drop from the original price of $25 per share.

Then, on April 3, 2019, The Parking REIT, Inc. announced that it will assume substantially all the assets and liabilities from The Parking REIT Advisors, its former manager. However, according to a lawsuit filed in March of 2019, the proposed internalization may unjustly benefit certain directors and officers of the REIT.

The Dangers of REIT Investments

While REITs are often marketed as low-risk, high yield investments, FINRA and the SEC have recently increased scrutiny into the marketing of these investments. Non-traded REITs are not traded on the public securities exchange, meaning that these REITs can often be illiquid. Many investors have reported being unable to redeem their shares from non-traded REITs and remain stuck in these uncertain investments as a result.

Many firms, including Centaurus Financial, have notoriously sold The Parking REIT to investors. If you invested in The Parking REIT and have lost part of your investment, not received your distributions, or remain stuck in the uncertain REIT, you may be eligible for monetary recovery. Contact our firm to learn more about your options.

After the closing of The Parking REIT’s initial public offering in 2017, the company sold $2.5 million in Series A Convertible Redeemable Preferred Stock and $36 million in Series 1 Convertible Redeemable Preferred Stock.

In Spring of 2020, The Parking REIT suspended distributions paid on the company’s Series A and Series 1 Preferred Stock. According to The DI Wire,

The Parking REIT indicated that unpaid preferred distributions will continue to accrue until they are declared by the board or otherwise paid following a liquidity event.

This news came after the REIT suspended its distributions for holders of its common stock in 2018. If you invested in any of The Parking REIT’s private placements, you may have a claim.

On October 5, 2018 The Parking REIT filed a preliminary prospectus with the SEC with the intention of raising $100 million in an initial public offering (IPO). According to The DI Wire, the company planned to use the IPO proceeds to repay, among other things, approximately $9.1 million in debt.

According to an SEC filing on August 29, 2019, the Parking REIT Inc. has withdrawn its registration statement. The filing states

the Company believes the withdrawal to be consistent with the public interest and the protection of investors as contemplated by paragraph (a) of Rule 477 of the Act.

Our firm will continue to investigate the truth on behalf of Parking REIT investors.

According to an article released by The DI Wire, a REIT stockholder filed a class action lawsuit against The Parking REIT in March of 2019.

As explained in the article, the complaint alleges that the company provided proxy statements containing false or misleading statements, that company directors breached their fiduciary duties, and that the internalization of the management platform will unjustly benefit some company directors and officers over others.

According to the filing

The complaint alleges, among other things, that the proxy statements failed to disclose that two major reasons for the merger and certain charter amendments implemented in connection therewith were (i) to facilitate the execution of an amended advisory agreement that allegedly is designed to benefit Shustek financially in the event of an internalization and to give Shustek the ability to cause the company to internalize based on terms set forth in the amended advisory agreement.

The DI Wire reports that the complaint seeks recovery of unspecified monetary damages as well as the payment of attorney’s fees and other expenses. Additionally, the complaint seeks trial by jury and an order halting the REIT’s listing on NASDAQ.

According to The DI Wire

The REIT and its board have reviewed the allegations in the complaint and believe the claims asserted against them are without merit and intend to vigorously defend the action.

Contact our securities lawyers to learn more about your rights as a shareholder and your options for monetary recovery.

Parking REIT CEO Michael V. Shustek also has an ownership interest in Vestin Realty Mortgage I and Vestin Realty Mortgage II REITs. According to Origin Investments, these two REITs lost nearly 90% of their value under his leadership.

Additionally, Origin Investments claims that in 2018, the MVP REIT II (now The Parking REIT) fees were being paid via a revenue sharing agreement created by Shustek between MVP REIT II and the Vestin Realty REITs. Apparently, Shustek used capital from Vestin I and II to pay the offering fees of the MVP REIT, which allowed the Vestin REITs to get a piece of the fees. But, according to Origin Investments, Shustek worded the agreement in a way which gave him a large share of the fees as well. Origin Investments quotes the agreement:

The operating agreement of the Advisor provides that once we and VRM I have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisor’s behalf, or capital investment, and once we and VRM I have received an annualized return on our capital investment of 7.5%, then Michael Shustek will receive 40% of the net profits of the Advisor.

Origin Investments further claims that Shustek acquired a personal loan from Vestin II while he was CEO at a 60% discount to face value, and paid this loan in full within 10 months.

MVP REIT was sponsored by MVP Capital Partners, LLC and advised by MVP Realty Advisors, LLC. Michael Shustek, is affiliated with both of these entities. Shustek is also a majority owner in the brokerage firm, MVP American Securities, which is no longer FINRA-registered.

Gibbs Law Group is currently investigating a number of REITs on behalf of shareholders. These REITs include:

• Northstar Healthcare Income REIT
• Hospitality Investors Trust
• Benefit Street Partners Realty Trust
• FS Credit Real Estate Income Trust–I
• Cole Credit Property Trust III (“CCPT III”)
• Apple non-traded REIT

If you invested in any of these REITs, or others, we may be able to help. Speak with a lawyer today to learn more.

Scott Silver

Scott focuses his law practice on securities arbitration and litigation and plaintiff-side class action litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others.

Eileen Epstein Carney

Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.

Dave Stein

David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.

Amanda Karl

Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.