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 the stockbroker or advisor.
HTI was incorporated on October 15, 2012, as a Maryland corporation that elected to be taxed as a real estate investment trust (REIT). As a publicly registered non-traded REIT, HTI was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares upon the recommendation of a broker or money manager. HTI terminated its offering in November 2014 after raising approximately $2.2 billion in investor equity. HTI invests in multi-tenant medical office buildings and owned a portfolio of 191 properties, as of the fourth quarter of 2018.
The Board of HTI has approved a $17.50 net asset value per share of the company’s common stock as of December 31, 2018, representing a decrease of nearly 13.6 percent compared with HTI’s December 31, 2017 estimated NAV per share of $20.25. HTI originally sold shares to the public for $25.00 each. HTI attributed the drop in its reported NAV to the effect of paying distributions to the company’s stockholders that net exceeded cash flows from operations and a $30.5 million decrease in the estimated value of its real estate assets compared to last year. While this lower $17.50 estimated NAV is bad news for investors, the worse news may be that transactions in the limited secondary market have reportedly taken place at $12.75 to $13.00 a share- suggesting that HTI shares may be worth even less than the estimated NAV.
Previously, HTI 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.
Non-traded REITs pose many risks that are often not readily apparent to retail investors, or adequately explained by the financial advisors and stockbrokers who recommend these complex investments. One significant risk associated with non-traded REITs has to do with their high up-front commissions, typically between 7-10%. In addition to high commissions, non-traded REITs like HTI generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.
Furthermore, non-traded REITs are generally illiquid investments. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange. Many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited. Typically, investors in non-traded REITs can only exit their investment through redemption directly with the sponsor on a limited basis, and often at a disadvantageous price, or through sales in a limited secondary market.
Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at email@example.com for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, New Jersey, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).