Behringer Harvard REIT I Tag Archives

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.

Behringer Harvard REIT I Share Price Cut Again

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.

Many investors are seeking avenues for recovery of REIT losses sustained in Behringer Harvard REIT I. This is only one of the Behringer Harvard REIT investments currently under investigation by stock fraud lawyers. Retired investors in particular have suffered unnecessary losses due to the unsuitability of this investment.

Recovery of Behringer Harvard REIT I Losses

Recently Behringer Harvard itself discovered it was being sued when an investor filed a class action in the U.S. District Court for the Northern District of Texas in September. The investor, Lillian Hohenstein, purchased 1,275 shares between 2004 and 2008. The case alleges breach of fiduciary duty and negligence by the trust, members of its board and its executives. In addition to the class action, many brokerage firms who sold the investment are facing arbitration panels for their unsuitable recommendation of Behringer Harvard REIT I.

The main problem with Behringer Harvard REIT I is that many investors were led to believe the investment was safe and similar to high quality, fixed income securities and chose to invest because they believed it was a low-risk, income-producing investment. However, these investors were not aware of the high risks and illiquidity associated with non-traded REIT investments. Many investors also did not realize that they were not guaranteed distributions and some of the distributions that were made before distributions ceased came from loans, and not cash flows generate by the REIT. Furthermore, many retired individuals were overconcentrated in this investment because of its perceived income-producing feature. As a result, many investors have suffered significant REIT losses.