2 — August 2024 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer ..............Linda Christman VP, Conference Producer .............................Lea Christman Editor/Graphic Artist ......................................Karen Vachon Contributing Columnists ........ Whitney Van Dean, AIA, LEED AP, CFI Workspace; Michael Mullin, IBSRE, Inc.; Jonathan Epstein, JTJ Tech; Joseph Latina, SIOR, and Jim Tancredi, LMT Commercial Realty, LLC/CORFAC International; Edwin Frieden, Ryan Fireprotection Mid Atlantic R eal E state J ournal ~ Published Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 117 HMS Halsted Dr., Hingham, MA 02043 USPS #22-358 | Vol. 36, Issue 8 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 www.marej.com
Michael Mullin
Phishing Scam Wipes Out a Whole Quarter of Earnings for REIT Dallas-based Real Es- tate Investment Trust (REIT), NETSTREIT, recently became the latest victim in a growing wave of cy- bercrimes targeting the com- mercial real estate sector. The company, which specializes in single-tenant, net-leased retail properties, suffered a significant financial blow when a phishing scam re- sulted in a loss that wiped out an entire quarter’s earnings. This incident underscores the increasing vulnerability of the real estate industry to sophis- ticated cyber threats. The scam unfolded when an employee of NETSTREIT was tricked into wiring $3.3 million to a fraudster imper- sonating one of the company’s development partners. This type of scam, known as a social engineering attack, manipu- lates individuals into divulg- ing confidential information or transferring funds under false pretenses. In NETSTREIT’s case, the company was able A
to recover some of the money through insurance, but it still reported a net loss of $2.8 mil- lion for the second quarter. The impact was so severe that it led to a reported net loss of three cents per share. NETSTREIT’s experience is a stark reminder of the financial and reputational risks posed by cybercrime, particularly in an industry that is increasingly reliant on digital transactions and communications. As more real estate firms digitize their operations, they become more attractive targets for cyber- criminals, who often exploit human error to carry out their schemes. Research indicates that the majority of cybersecu- rity breaches stem from such errors, whether it’s clicking on
a malicious link or, as in NET- STREIT’s case, falling victim to a fraudulent email. This incident is not just a costly lesson for NETSTREIT but also a warning for the entire real estate sector. The company, which went public in 2020, has built its business on investing in retail properties leased to tenants with strong financials and a focus on e-com - merce-resistant businesses. Despite this sound strategy, the phishing scam has dem- onstrated that even well-run companies are not immune to the risks of cybercrime. NETSTREIT reported that, aside from the cyberattack, its second-quarter performance was relatively strong. Adjusted continued on page 33
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