On December 20, 2012, Behringer Harvard REIT I officials stated that its per share price valuation was decreasing from $4.64 per share to $4.01 per share. Securities fraud attorneys say this last devaluation represents a significant decline from its original offering price. Behringer Harvard REIT I has assets amounting to $4.2 billion. Allegedly, the devaluation is a result of funding leasing and operating costs with the use of assets, distribution payments and reductions in the value of its real estate assets and debt.
Non-traded REITs, such as Behringer Harvard REIT I, carry a relatively high dividend or high interest, making them attractive to investors. In many cases, stock fraud lawyers say brokers may have represented Behringer Harvard REIT I as a safe, conservative investment. However, in reality, non-traded REITs are inherently risky and illiquid. Some of the factors that make REITs risky investments are that distributions are not guaranteed, valuation complexities and illiquidity can be created if there is a deficiency of a public trading market, redeeming the investment early is often expensive and restrictive and non-traded REITs’ valuation can be affected by many factors, including the trust’s balance sheet strength, cost of capital, overhead expenses and the portfolio of assets owned.
As a public non-traded REIT, Behringer Harvard REIT I may have carried a high commission which may have motivated 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. Securities fraud attorneys say that if Behringer Harvard REIT was misrepresented by their brokers as safe, clients may be able to recover losses through securities arbitration. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT, which resulted in an over-concentration that was unsuitable for investors.
If you suffered significant investment losses as a result of your broker’s unsuitable recommendation of Behringer Harvard REIT I or an over-concentration in the non-traded REIT, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.