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.
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.
SSSHT REIT invests in student housing and senior housing communities and reportedly raised approximately $93 million from its private offering which ended in March 2018, along with its subsequent public offering. As of March 16, 2020, the company had reportedly raised $17 million in investor equity in its primary public offering.
As a publicly registered non-traded REIT (after it began its public offering in 2018), SSSHT REIT was permitted to sell securities to the investing public at large, including unsophisticated retail investors who bought shares upon the recommendation of a broker or money manager.
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 SSSHT REIT 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. Now that the REIT has suspended its SRP, investors may be left with very limited options if they wish to sell their shares in SSSHT REIT.
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).