Phishing Scam Wipes Out a Whole Quarter of Earnings for REIT

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A Dallas-based REIT recently fell victim to a phishing scam that resulted in a $3.3 million loss and pushed the company into the red for the second quarter. Also, don’t miss our August 27th Propmodo Live webinar about balancing budget and resident experience in Class A multifamily properties. Register today.

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Phishing Scam Wipes Out a Whole Quarter of Earnings for REIT

A Dallas-based REIT recently fell victim to a phishing scam that cost the company millions of dollars and pushed it into the red for the second quarter. The incident is the latest in a series of cybercrimes targeting commercial real estate firms.

An employee of NETSTREIT, a net lease retail specialist, fell prey to the scam and wired $3.3 million to someone impersonating one of the company’s development partners. NETSTREIT disclosed the incident in its second-quarter earnings release, reporting a net loss of three cents per share.

The financial fraud resulted in a $2.8 million loss for the second quarter, even after the insurance payout. “With the assistance of third-party experts, the company determined this isolated event poses no further threat to the company or its partners,” NETSTREIT stated in the earnings release.

NETSTREIT, which went public in 2020, strategically invests in single-tenant, net-leased retail properties nationwide with “e-commerce-resistant tenants with healthy balance sheets.” Aside from the cybercrime incident, the company had a decent second quarter, with adjusted funds from operations reaching 32 cents per share, a slight increase from last year.

As cybercrime grows in real estate, NETSTREIT’s experience serves as another case study of what can go wrong. Research shows that most cybersecurity breaches involve human error, such as clicking on malicious links or, as in NETSTREIT’s case, being tricked into giving up sensitive information in what’s known as a “social-engineering attack.”

Phishing attacks are usually just the beginning for cybercriminals, who often use them to gain access to systems, install malware, or launch ransomware attacks. As the real estate industry continues to digitize, firms will need to enhance staff training and pay much closer attention to cybersecurity.

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