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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 a stockbroker or advisor.

Piggybank in a Cage
HTI,  a publicly registered non-traded real estate investment trust, announced that it has amended the company’s distribution policy and share repurchase program to end cash distributions and suspend redemptions.   Future distributions to shareholders will be paid in shares of common stock instead of cash, and share repurchases under the REIT’s share repurchase plan (or “SRP”) were suspended.  These announcements leave investors with no cash income from the REIT, and limited options if they wish to sell shares.

HTI states that it made these changes to preserve liquidity and maintain additional financial flexibility in light of the COVID-19 pandemic.  In a filing with the U.S. Securities and Exchange Commission (“SEC”), HTI indicated that any future distributions, if and when declared, will be paid on a quarterly basis in arrears in shares of common stock valued at the net asset value per share.  The number of shares paid will continue to be based on the prior cash distribution rate of $0.85 per share per year, the company said.

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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.  HTI was incorporated on October 15, 2012, as a Maryland corporation that elected to be taxed as a real estate investment trust (REIT).  HTI invests in multi-tenant medical office buildings and, as of year-end 2017, owned a portfolio consisting of 8.4 million-square-feet including 164 properties, with a total purchase price of $2.3 billion.

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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 through the offering 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.

Recently, third party real estate investment firm MacKenzie Capital Management(“MacKenzie”) initiated an unsolicited mini-tender offer to purchase up to 200,000 shares of HTI for $7.99 per share.  In response, HTI launched its own tender offer to purchase up to 200,000 shares for $8.50 a share, “in order to deter MacKenzie and other potential future bidders that may try to exploit the illiquidity of the shares and acquire them from the company’s stockholders at prices substantially below their estimated [net asset value per share].”

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Investors with losses in Healthcare Trust, Inc. a non-traded real estate investment trust (Non-Traded REIT) may have arbitration claims if a broker or advisor made a recommendation to purchase the shares without a reasonable basis or misled the customer as to the nature of the investment.  Healthcare Trust is an investment trust which seeks to acquire a diversified portfolio of real estate properties focusing primarily on healthcare-related assets including medical office buildings, seniors housing, and other healthcare-related facilities.

According to secondary market providers that allow investors to bid and sell illiquid products such as Non-Traded REITs, shares in Healthcare Trust are selling for about $14.99 per share – which represents a significant principal loss compared with the offering price of $25.00.

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