TAG | Unsuitable REIT investments
Comments off · Posted by Securities Lawyer in FINRA
Recently, InvestmentNews.com did an analysis of eight of the largest nontraded real estate investment trusts (REITs). They found that these REITs have lost $11.3 billion, or 37% of their equity value, over the past seven years.
On August 14th., CNL Lifestyle Properties Inc., which initially raised $2.7 billion at $10 a share, became the latest large nontraded REIT to report a sharp decline in value; its share price dropped to $7.31.
In July, the Dividend Capital Total Realty Trust Inc., which raised $1.8 billion in equity at $10 per share, revised its value to $6.69 per share. In March, the REIT said its value was $8.45 per share.
Some industry observers commented that the revaluation of CNL Lifestyle Properties is likely to be the last nontraded REIT to see a substantial decline in value. The eight REITs analyzed for InvestmentNews.com were notable because they had raised more than $1 billion in equity, and their declines in equity value were greater than 20%.
The decline in estimated equity value does not take into consideration the “distributions,” or dividend yields, that the REITs have been paying clients. Such yields can range from 5% to 7% annually. Accounting for those distributions is important in the discussion of nontraded REITs returns, industry executives noted.
These eight REITs which were examined, are a large part of the nontraded-REIT and “direct participation program” investment industry, which will raise between $9 billion and $10 billion from investors this year through independent broker-dealers.
The one exception: The family of REITs known as the Apple REITs was not included in the analysis, because their share prices are currently listed as “not priced.” The Financial Industry Regulatory Authority Inc. (FINRA) last year filed a complaint against David Lerner and Associates Inc., alleging that since at least 2004, “the closed Apple REITs have unreasonably valued their shares at a constant price of $11, notwithstanding market fluctuations, performance declines and increased leverage.” over sales of the REITs.
The InvestmentNews.com article said that during the surge in the commercial real estate market, which peaked near the end of 2007, some registered reps sold nontraded REITs to clients and characterized them as bond alternatives. Some reps sold these investments appropriately, and some reps fell short.
If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding these or other non-traded REITs, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: http://www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Did You Invest With James J. Albright, Jr, of Sagepoint Financial (p/k/a AIG Financial) of Manitowoc, Wisconsin?
Comments off · Posted by Securities Lawyer in FINRA
Soreide Law Group, PLLC, and Securities Attorney Lars K. Soreide, are investigating James J. Albright, Jr., and Sagepoint Financial, Inc., previously known as AIG Financial Advisers, of Manitowoc, Wisconsin.
The alleged claims are based on Albright’s recommendations to his clients to purchase unsuitable, risky and illiquid non-traded real estate investment trusts (“REITs”). Due to the result of Albright’s alleged sales practices, his clients suffered substantial losses and cannot access their funds, which are now locked into illiquid investments.
Some of the REITs involved are: KBS, Behringer Harvard, G, NNN Healthcare Office, and Inland Western.
For years, Soreide Law Group has been cautioning our clients and readers of our blog, about the dangers of these risky REIT investments, including, but not limited to, the illiquidity, and high commissions paid to the brokers. Non-traded REITs are now being scrutinized by the securities regulators. They are watching in particular the suitability for the individual investor, asking whether the investment is suitable and how these products sold or ‘pitched’ to the customer. Non-traded REITs have declined dramatically in value over the past several years.
AIG Financial Advisers · brokers recommending risky investments · failure to supervise brokers · Financial Industry Regulatory Authority · FINRA · FINRA arbitration · high risk investments · illiquid long term nontraded REITs · inadequate supervisory procedures by broker/dealers · James Albright Manitowoc WI · James J Albright Jr · Lars K. Soreide · Mortgage REITs · non-traded real estate investment trusts · Non-traded REITs · REIT · risky investments · SagePoint Financial Inc. · Stock fraud lawyer · Unsuitable REIT investments