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Investors In Non-Conventional Investments and REITs Face Suspended Redemptions

money whirlpoolInvestors who have recently tried to redeem investments made in real estate investment trusts (REITs) or limited partnerships (LPs) may have encountered an unpleasant surprise – many sponsors of such investments have ended or suspended redemption programs for investors.

Redemption programs are mechanisms by which investors in non-publicly traded securities may sell their securities back to the sponsor or the company for a stated price, sometimes with certain restrictions.

Redemption programs in many of the larger-capitalization REIT and LP investments recommended by financial advisors and stockbrokers have been suspended in recent years.  Since these investments are not generally traded on any conventional exchange, there may be a limited or no market should you want or need to liquidate your investment in these non-traded financial products.

Redemption programs for the following REITs and LPs have been suspended , restricted or do not exist:

*          American Finance Trust

*          ARC Healthcare Trust III

*          ARC New York City REIT

*          ATEL Leasing Programs

*          Behringer Harvard Opportunity REIT I

*          Highlands REIT

*          Hospitality Investors Trust (was ARC Hospitality Trust)

*          InvenTrust Properties (was Inland American Real Estate Trust)

*          KBS Legacy Partners Apartment REIT

*          KBS REIT II

*          Rancon Realty Fund IV

*          Strategic Realty Trust

*          Summit Healthcare REIT (was Cornerstone Core Property REIT)

*          Uniprop MHC Income Trust II

*          United Development Funding III

Investors in these non-conventional investments 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.

Non-traded REITs are generally illiquid investments.  Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange.  Therefore, many 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 position through redemption directly with the sponsor, and then on a limited basis, and often at a disadvantageous price.  Or, investors may be able to sell shares through a limited and fragmented secondary market.  As discussed above, investors may be left without viable options to exit their investments if redemption plans are suspended.

Investors with concerns about a non-traded investment  may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at for a no-cost, confidential consultation.

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