Español
Published on:

Investors in Resource Real Estate Opportunity REIT (“Resource REIT”) and  m Resource Real Estate Opportunity REIT  II (“Resource REIT II”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Maze
Resource REIT and Resource REIT II shares have reportedly traded in private transactions at significantly lower prices than their reported NAVs (net asset values).  Resource REIT shares are listed at an estimated NAV of $11.10 a share, but reportedly have changed hands for between $6.50 and $6.66 a share.  Resource REIT II shares, with a reported NAV of $9.08 a share, reportedly have changed hands for between $4.50 and $5.00 a share.

Resource REIT reportedly raised $645.8 million in investor capital prior to closing its offering in December 2013. As of June 30, 2020, the company’s $920 million portfolio reportedly included 28 multifamily properties and one performing loan.  Resource REIT II’s primary offering reportedly launched in February 2014, closed in February 2016 and raised $645 million in investor capital. As of June 30, 2020, the REIT’s $717 million investment portfolio reportedly included 17 multifamily properties.

Published on:

Investors in Moody National REIT II (“Moody II”)  may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Whirlpool
Moody II is a non-traded real estate investment trust (non-traded REIT).  According to secondary market quotes, Moody II shares have decreased in value   Investors who were relying on Moody II’s most recent estimated NAV (net asset value) of $23.50 a share announced by its sponsor could be in for an unwelcome surprise, as shares have reportedly been sold on the limited secondary market for prices as low as between $7.50 and $8.00 a share.

Moody II was formed in July 2014 to acquire a portfolio of hospitality properties (a/k/a hotels and resorts) focusing primarily on the select-service segment of the hospitality sector with premier brands including, but not limited to, Marriott, Hilton and Hyatt. According to the investments’ Fact Sheet, Moody REIT’s objectives are to “Preserve, protect and return stockholders’ capital contributions. Pay regular cash distributions to stockholders. Realize capital appreciation upon the ultimate sale of the real estate assets acquired by Moody National REIT II, Inc.”

Published on:

Investors in Healthcare Trust, Inc. (“HTI”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by a stockbroker or advisor.

Piggybank in a Cage
HTI,  a publicly registered non-traded real estate investment trust, announced that it has amended the company’s distribution policy and share repurchase program to end cash distributions and suspend redemptions.   Future distributions to shareholders will be paid in shares of common stock instead of cash, and share repurchases under the REIT’s share repurchase plan (or “SRP”) were suspended.  These announcements leave investors with no cash income from the REIT, and limited options if they wish to sell shares.

HTI states that it made these changes to preserve liquidity and maintain additional financial flexibility in light of the COVID-19 pandemic.  In a filing with the U.S. Securities and Exchange Commission (“SEC”), HTI indicated that any future distributions, if and when declared, will be paid on a quarterly basis in arrears in shares of common stock valued at the net asset value per share.  The number of shares paid will continue to be based on the prior cash distribution rate of $0.85 per share per year, the company said.

Published on:

Investors in New York City REIT (“NYC REIT”, formerly known as American Realty Capital New York City REIT)  may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Wastebasket Filled with Crumpled Dollar Bills
NYC REIT is a former public, non-traded REIT that listed on the New York Stock Exchange (“NYSE”) on August 18, 2020 under the ticker symbol “NYC”.  Investors who were relying on NYC REIT’s most recent estimated NAV of $20.26 a share (valued as of June 30, 2019) were in for an unwelcome surprise, as despite a reverse split of its shares of 2.43 to 1, NYC REIT shares closed their first day of trading at $17.60 a share.

This price doesn’t sound so bad until one accounts for the reverse split- after the 2.43 to 1 reverse split, pre-split shares of NYC REIT are effectively worth only about $7.24 a pre-split share.  While drastically below the sponsor’s stated value of $20.26 a share, this price is only modestly below the $8.75 to $9.50 a share purchase of NYC REIT in the illiquid private market before share listed.  Shares of the REIT were originally sold to the public for $25.00.

Published on:

Investors in Terra Income Fund 6 (“Terra 6”) may be able to recover losses on their investment through initiating an arbitration proceeding with FINRA Dispute Resolution, if a broker or financial advisor made the recommendation to invest in Terra 6 without a reasonable basis, or misled the investor as to the nature of the investment.  Terra 6 is a non-traded business development company headquartered in Kansas City, Missouri.  Formed on May 15, 2013 and commencing operations on June 24, 2015, Terra 6 is a non-traded business development company (“BDC”).

https://i1.wp.com/www.investorlawyers.net/blog/wp-content/uploads/2017/08/15.6.15-money-whirlpool.jpg?resize=300%2C300&ssl=1
As an investment vehicle, BDCs first emerged in the early 1980’s following legislation passed by Congress making certain amendments to federal securities laws.  These legislative changes allowed for BDC’s — types of closed end funds — to make investments in developing companies and firms.  Many brokers and financial advisors have recommended BDCs as investment vehicles to their clientele, touting the opportunity for retail investors to earn enhanced dividend income while participating in private-equity-type investing previously unavailable to the average “Mom and Pop” investor.

While non-traded BDCs may offer an attractive investment opportunity for certain investors, non-traded BDCs, such as Terra 6, are complex and risky investment products.  Non-traded BDCs, as their name implies, do not trade on a national securities exchange, and are therefore illiquid products that are hard to sell (investors can typically only sell their shares through redemption with the issuer, or through a fragmented and illiquid secondary market).  Further, non-traded BDCs often entail high up-front fees and commissions (typically 10% or more in the aggregate), which are apportioned to the broker, his or her broker-dealer, and the wholesale broker or manager.  Finally, although they are frequently sold as steady income investments, non-traded BDCs do present the risk of loss of principal.

Published on:

Investors in Phillips Edison & Company, Inc. (“PECO”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Maze
PECO was formed in Maryland in October 2009 as a non-traded real estate investment trust (or “REIT”), to acquire grocery-anchored shopping centers. In November 2018, PECO officially merged with Phillips Edison Grocery Center REIT II (“Phillips Edison II), a move that caused significant loss to its investors. Investors who purchased shares in PECO at the initial offering acquired shares at $10.00 per share, and while PECO’s sponsor has said that it currently has an estimated net asset value (“NAV”) of $8.75 per share, shares on the limited private secondary market have reportedly traded between $4.50 and $5.50 per share in recent months.

Making matters worse, in March 2020 PECO announced that it would suspended monthly distributions, as well as share repurchases or redemptions, albeit indicating that these  suspensions will be temporary.  As measures to guard against liquidity issues, PECO also reportedly borrowed $200 million from a revolving credit facility and announced plans to reduce expenses.

Published on:

Investors in Strategic Student & Senior Housing Trust, Inc. (“SSSHT REIT” or “the REIT”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

money whirlpool
SSSHT REIT, a publicly registered non-traded real estate investment trust (or “REIT”) sponsored by SmartStop Asset Management LLC, has reportedly suspended its distributions to shareholders, due to concerns over the COVID-19 pandemic’s possible adverse financial impact on the Company.

The REIT’s Board has also suspended its share redemption program (SRP), effective May 3, 2020.  No redemption requests made for the first quarter of 2020 will be honored.  SSSHT indicates that it does not intend to honor investor redemption requests, until further notice.

Published on:

Investors in Healthcare Trust, Inc.  may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Bags
According to filings with the SEC, on April 3, 2020, Healthcare Trust announced that its board of directors announced an estimated NAV per share of $15.75 as of December 31, 2019.  This marks a 10% decline from the previous estimated NAV per share of $17.50 per share as of December 31, 2018. Previously, Healthcare Trust lowered its annual distribution rate from $1.45 to $0.85 per share on March 1, 2018, after lowering distributions and previously from $1.70 per share to $1.45 per share in 2017.

But shares of Healthcare Trust, which initially sold for $25.00/share, may be worth even less, and have reportedly changed hands in the limited and illiquid secondary market at prices of between $7.75 and $8.25 a share as of the date of this writing.  Unfortunately for many investors in Healthcare Trust, it would appear that investors who attempt to exit their illiquid investment will incur a substantial loss.

Published on:

Investors in Hospitality Investors Trust Inc. (“HIT”), a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the broker or financial advisor.

Wastebasket Filled with Crumpled Dollar Bills
HIT owns a portfolio of hotel properties throughout North America, including various Hilton-, Marriott- and Hyatt- branded hotels, within the select service and full-service markets.  As of December 31, 2018, HIT reportedly owned 144 hotels.  The REIT’s offering was declared effective in January 2014 and suspended sales activities in November 2015 after raising $903 million in investor equity, according to Summit Investment Research.

In April 2017, HIT changed its name from American Realty Capital Hospitality Trust to HIT after restructuring to become a standalone self-managed REIT as well as a partnership with Brookfield Strategic Real Estate Partners II.  Prior to the restructure and name change, HIT had an agreement with American Realty Capital Hospitality Advisors LLC, and affiliate of AR Global Trust II.

Published on:

Investors in ICON Equipment and Corporate Infrastructure Fund Fourteen, LP (“ICON 14”)  may be able to recover investment losses through FINRA arbitration. if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

money blowing in wind
ICON 14 is managed by ICON Capital, LLC, and is part of a category of alternative investments that is commonly referred to as an equipment leasing and finance fund.  Specifically, ICON 14 is a non-traded, publicly registered equipment finance fund.  ICON 14 purportedly makes opportunistic investments in middle market companies by providing financing solutions that are secured by the company’s business-essential equipment as collateral.

ICON 14 was sold to investors beginning in or about 2010 at a per interest price of $1,000.  Now, as its process of liquidation continues, ICON 14 interests appear to be worth less than $32.00 each, and investors have lost a substantial portion of their principal invested, even net of distributions.

Contact Information