Recovery of Behringer Harvard Opportunity REIT I Losses

by InvestorLawyers on November 1, 2012

in Arbitration,FINRA,REIT,Retirement,Suitability

Many investors have suffered significant REIT losses as a result of their investment in the Behringer Harvard Opportunity REIT I. The investment’s $10 per share offering price in 2009 fell significantly to an approximate value of $4.12 per share at the end of last year, representing a 58 percent loss. This figure includes the 46 percent drop experienced at the end of 2010, when it was valued at around $7.66 per share.

Recovery of Behringer Harvard Opportunity REIT I Losses

In the period beginning in December 2010 and ending in September 2011, Behringer Harvard Opportunity REIT I’s assets declined to $580 million from $697.6 million. The REIT reported an $83 million net loss.

According to investment fraud lawyers, many investors believed their non-traded REIT’s share price was stable. However, it only appeared stable because the manager reports the par value, which does not necessarily take into account the underlying assets deterioration. Furthermore, typically the initial pricing does not include fees and other expenses, which can result in a loss because these dollars are not actually invested.

Investors in the Behringer Harvard Strategic Opportunity Fund I received bad news in August of 2012, when they were notified that the fund’s liabilities exceed its assets. The fund was initially offered in 2005. In order to invest in six properties, the fund raised $65 million. Properties include an Amsterdam office building and a Wilshire Boulevard hotel in Los Angeles.

Typically, REITs carry a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs carry a relatively high dividend or high interest, making them attractive to retired investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors. Frequent updates of the investment’s current price are not required of broker-dealers, causing misunderstandings about the financial condition of the investment. Because frequent updates are not required, investors may believe the REIT is doing much better than it actually is. This was almost certainly the case with the Behringer Harvard Opportunity REIT I.

If you suffered significant losses as a result of your investment in the Behringer Harvard Opportunity REIT I or the Behringer Harvard Strategic Opportunity Fund I, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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