Many investors are currently seeking recovery of their Inland American REIT losses through Financial Industry Regulatory Authority securities arbitration. Following Inland American’s 10Q Securities and Exchange Commission Q1 filing, investors were made aware of a current investigation being conducted by the SEC. According to this 2012 quarterly report, which was issued in May, Inland American had “learned that the SEC is conducting a non-public, formal, fact-finding investigation to determine whether there have been violations of certain provisions of the federal securities laws regarding our business manager fees, property management fees, transactions with our affiliates, timing and amount of distributions paid to our investors, determination of property impairments, and any decision regarding whether we might become a self-administered REIT.”
Inland American’s prospectus, initially filed in August 2005, shows fees and commissions including a .5 percent due diligence expense allowance, a 2.5 percent marketing contribution and a 7.5 percent selling commission. Furthermore, Inland American’s 2011 annual report indicates that a $40 million business management fee and a $1.6 million investment advisory fee to be paid to its business manager.
Other concerns related to the Inland American REIT that investors should be aware of include the fact that even though it was recognized as the largest non-traded REIT, with real estate assets totaling over $11 billion, nearly 30 percent of the REIT’s properties are located in only four cities. The quarterly report cited above states that “Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas or natural disasters in those areas.” Furthermore, the report discloses the fact that around 16 percent of the properties owned by the REIT are leased by SunTrust Bank and AT&T.
Many Inland American REIT investors are concerned about their investment, and with good reason. However, these investors could recover their REIT losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.