Report says REIT changes proposed by AR Global would remove investor protections

June 1, 2016

Robert A. Stanger & Co. critical of proxies firm has sent out in preparation for possible consolidations

May 31, 2016 @ 12:45 pm | By Bruce Kelly | Investment News

Nicholas Schorsch
Nicholas Schorsch

Changes proposed at seven real estate investment trusts controlled by Nicholas Schorsch’s AR Global present a “clear and present danger” to their investors by eliminating investor protections, according to a report issued Tuesday by Robert A. Stanger & Co. Inc., an investment bank that focuses on nontraded REITs.

Serious changes are afoot at AR Global. In April, InvestmentNews reported that AR Global was attempting to consolidate more than a half-dozen real estate investment trusts with almost $10.5 billion in assets. Weeks later, a former independent director of two nontraded real estate investment trusts controlled by AR Global claimed “a manifest conflict of interest” in the potential merger of one of those REITs into a related company.

The flurry of mergers, if successful, would put more assets under control of two REITs, American Finance Trust and Global Net Lease, which have unusual, difficult-to-break 20-year advisory contracts with AR Global. AR Global does not have the 20-year advisory agreements with the other REITs it manages.

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