If you’ve put money into Lodging Fund REIT III—or are considering it—you deserve to know the full picture. This real estate investment trust (REIT), focused on the hospitality sector, has recently come under scrutiny for financial and regulatory issues. Here’s a breakdown of the situation.
Executive Trouble
In 2023, a high-level executive involved with the REIT’s management agreed to settle with federal regulators over questionable financial practices.
Apparently around $5 million was paid out to advisory firms connected to the executive, even though those firms were supposed to handle their own overhead costs like salaries and rent. These payments violated prior agreements with investors, which clearly said the REIT wouldn’t cover those kinds of expenses.
Federal authorities stepped in, issuing a six-figure fine to the executive and ordering the firms involved to repay almost all of the money—plus interest.
Filing Delays and Transparency Worries Regarding Lodging Fund REIT III
Investors expect timely and accurate updates on their investments. But Lodging Fund REIT III has been lagging behind. Its 2023 annual report was filed nearly a year late, and several quarterly reports from both 2022 and 2023 were delayed or still missing.
These missed deadlines aren’t just minor paperwork issues—they may suggest deeper operational or management problems. When a company can’t keep up with basic reporting, it becomes much harder for investors to make informed decisions.
Non-Traded REITs Not for Everyone
Lodging Fund REIT III is a non-traded REIT, meaning it isn’t listed on the stock market. Unlike stocks or mutual funds, these investments come with unique risks. They can be extremely difficult to sell, often locking investors in for years. Distributions, or income payouts, can be suspended without warning—especially during economic downturns. Additionally, high commissions may encourage brokers to recommend them even when they’re not the best fit. Because of these factors, non-traded REITs are generally better suited for experienced or high-net-worth investors—not those seeking liquidity or short-term returns.
Are Brokers Doing Their Homework?
Brokers are expected to thoroughly research investments—especially complex ones like non-traded REITs—and recommend them only when they suit a client’s financial goals, background, and risk tolerance. If they fail to meet this standard or minimize the risks, they could be held responsible for any resulting losses.
If you’ve suffered significant losses in Lodging Fund REIT III, you may have legal options to recover your money. One possible route is FINRA arbitration, a private process tailored for investment-related disputes and often used for larger individual claims.
Did You Sustain Losses By Investing In Lodging Fund REIT III?
Lodging Fund REIT III is facing challenges—from delayed filings to regulatory penalties. If you’re invested and feeling uneasy, trust your instincts and take a closer look. This is a good time to speak with a legal professional who can explain your options.
Did you experience losses because your financial advisor recommended Lodging Fund REIT III? If so, reach out to Soreide Law Group online or at (888) 760-6552 and talk with a securities attorney concerning a potential recovery of your investment losses. Soreide Law Group has recovered losses for investors throughout the United States, works on a contingency fee basis, and advances all costs.
