Colony Credit Real Estate (NYSE: CLNC) Losses?

Soreide Law Group is reviewing possible claims of unsuitability against brokers on behalf of investors who purchased Colony Credit Real Estate Inc. (NYSE: CLNC) because of their broker’s recommendations. CLNC is a commercial real estate credit real estate investment trust. It focuses on origination, acquisition, finance, and management of a portfolio comprised of net lease real estate investments and commercial real estate debt located mainly in the United States.
CNLC Composition And Concerns
Notably, CLNC came to be through a combination of NorthStar Real Estate Income II, Inc. and NorthStar Real Estate Income Trust, Inc. both of which are non-traded real estate investment trusts that a subsidiary sponsors and manages. Apparently, CLNC’s portfolio is comprised of senior secured loans (thirty seven percent), non-core real estate (twenty-four percent), owned real estate (sixteen percent), mezzanine loans (twelve percent), CRE debt securities (seven percent) and preferred equity (four percent).
CNLC’s portfolio is problematic for a few reasons. First, CLNC’s four loans secured through a hotel in NYC are going through a restructuring, which serves as a detriment to CLNC’s earnings potential. Second, the firm has high retention risk as evidence by a 4.0 weighted average remaining lease term in CLNC’s net lease portfolio. Finally, the firm’s merger of three entities and external management has created costs which have impacted investor returns. CLNC closed at $16.99 as of January 11, which is close to its 52 Week low of $15.39.

Securities Brokers Selling Unsuitable Or Misrepresented CNLC Investments To Investors

Occasionally, brokers sell aggressive REIT investments to conservative investors whose objectives are income and principal protection. However, REITs are equities containing substantial increase in risk compared with bonds or other income producing investments. Additionally, REITs are subject to systemic risk because of large concentrations in the real estate market. Often times, brokers inappropriately recommend investors purchase REITs because of their attractive yields, but downplay the risk of the REITs in the process. And because of the high commissions charged on REIT investments, many brokers push REITs instead of other investments which could be more suitable for investors.

Has a broker misrepresented CNLC or sold you unsuitable CNLC investments? If you experienced losses by investing in CNLC, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Our firm has recovered millions of dollars for investors who have suffered losses due to broker and brokerage firm misconduct. We represent clients on a contingency fee basis and advance all costs.