Nontraded REIT halts fundraising, seeks new broker-dealer

United Realty Trust shelves IPO until it can replace struggling Allied Beacon

Jun 18, 2013 @ 2:53 pm

By Bruce Kelly

A nascent nontraded real estate investment trust has suspended its fund raising as management continues to look for a broker-dealer to distribute the REIT after its former broker-dealer went belly-up.

United Realty Trust Inc. yesterday said it halted its initial public offering May 30 after its distributing broker, Allied Beacon Partners Inc., ran afoul of industry net-capital regulations. Allied Beacon, a midsize independent broker-dealer with about 200 affiliated registered representatives, lost a Financial Industry Regulatory Authority Inc. arbitration award of $1.6 million last month and didn't have the money on hand to pay the award, causing the violation.

Net-capital violations typically are death knells for broker-dealers. In instances of arbitration awards, firms have 48 hours to show regulators they have the money to pay awards to claimants. If a firm fails to find the cash, it is in violation of net-capital rules. Operations are frozen, and brokers can no longer trade for clients.

“While the IPO remains suspended, [United Realty Trust] is evaluating its dealer management arrangements, and intends to engage as [its] dealer manager Cabot Lodge Securities LLC,” the REIT said in a filing yesterday with the Securities and Exchange Commission.

“We're in the process of changing over dealer managers,” said Jacob Frydman, chief executive of the REIT and one of the owners of Cabot Lodge.

The REIT was launched last year and has $24.9 million in assets.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Tortoise's Henson: A new look at impact investing

With the growth of impact investing, it is difficult to separate the contenders from the pretenders. Gary Henson of Tortoise gives advisers a new way to look at impact investing.

Latest news & opinion

Step one: Withdraw from the broker protocol

Pulling out of the protocol proved to be one part of multipronged strategies by Morgan Stanley and UBS to reduce broker attrition. So far, their plans seem to be working.

11 best islands in the world to retire to

International Living has come up with a list of affordable islands around the world.

SEC tests show investors don't understand disclosure form for brokers, advisers

Investor advocates: Agency still has a lot of work to do on Form CRS

Wells Fargo considering sale of retirement-plan unit

The business could fetch as much as $1 billion, sources say.

Employees can now save in a 401(k) by using a credit card

EvoShare provides workers with credit-card perks in the form of contributions to a retirement plan.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print