Soreide Law Group is evaluating possible claims of unsuitability against brokers who advised investors to purchase NorthStar Healthcare Income Inc. Notably, NorthStar Healthcare Income Inc. just indefinitely suspended monthly distribution payments to shareholders.
Apparently, NorthStar Healthcare Income Inc. is a publicly registered real estate trust created to acquire, originate and manage a portfolio of securities in the healthcare industry. NorthStar Healthcare Income, which is closed to new subscriptions as of December 17, 2015, issued a letter to its stockholders on February 8, 2019. The purpose of the letter was to inform NorthStar Healthcare common stock investors about the suspension of distributions. Evidently, the suspension of distributions is effective February 1, 2019.
Supposedly, NorthStar Healthcare Income Inc. thoroughly analyzed its financial condition, liquidity, needs for capital, and business operations. Eventually, it concluded that it was best to maintain capital and protect the company’s financial position by suspending distributions. Apparently, the company intends to use the withheld monies to invest in its assets and reduce leverage so that it can provide stockholders more long-term value.
Notably, the letter stated that NorthStar Healthcare Income Inc.’s performance and operational challenges contributed to its lower estimated value per share as of June 30, 2018 versus June 30, 2017. The board mentioned four key contributing factors. First, the letter stated that NorthStar’s cash flows were negatively impacted by trends in the senior housing market; there were less occupants because of more suppliers. Apparently, this caused a reduction in operating revenue of assets held by the portfolio.
Second, the letter detailed that labor costs in the investments NorthStar holds have been detrimental to the NorthStar’s portfolio. Specifically, with less qualified workers and more statutory wage increases, property-level operating expenses increased. Third, NorthStar Healthcare Income Inc. referenced the skilled nursing industry’s cash flow pressures have caused restructuring of leases and replacement of tenants. Also, it has caused affected assets to produce less income. Fourth, the letter referenced disruptions in operations and occupancy due to operator transitions.
In fact, Brokers are liable for making unsuitable recommendations of investments to investors. Non-traded real estate investment trust products such NorthStar Income Inc. are typically high risk and speculative investments. Because of this, non-traded REITs are often not appropriate for investors with more conservative risk tolerances. Further, because there is no public marketplace for non-traded REITs, investors sometimes have problems selling their positions. For this reason, the investments are typically not suitable for investors who require liquidity in their portfolios.
Investors who have incurred losses by investing in NorthStar Healthcare Income Inc. can contact Soreide Law Group at (888) 760-6552 for a free consultation. Our firm has recovered millions of dollars for investors who have suffered losses. We represent clients on a contingency fee basis and advance all costs.
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