WARNING: NORTHSTAR HEALTHCARE REIT SUSPENDS DIVIDENDS

Soreide Law Group has been contacted by investors who have experienced losses due to their broker/dealers recommending the highly risky, non-traded REIT, NorthStar Healthcare to their investors.
In a recent letter to their stockholders, NorthStar Healthcare Income, Inc. wrote to the investors that they were updating information regarding the investment in shares of NorthStar Helthcare’s common stock, including monthly distributions previously paid on the shares. Then the letter stated that:
ON FEBRUARY 1, 2019, THE BOARD OF DIRECTIORS OF NORTHSTAR HEALTHCARE DETERMINED TO SUSPEND THE MONTHLY DISTRIBUTION TO STOCKHOLDERS.
The letter dated, February 8, 2019, goes on to say that the board believes it is “prudent to preserve capital and protect NorthStar Healthcare’s financial position by suspending distributions at this time. NorthStar Healthcare expects that cash retained by the suspension of cash distributions will allow NorthStar Healthcare to reinvest in its assets through maintenance and strategic capital expenditures and reduce leverage in order to drive long-term value for stockholders.”
According to the letter to the stockholders, “NorthStar Healthcare’s portfolio has been experiencing operational and performance challenges that led to a lower estimated value per share of NorthStar Healthcare’s common stock as of June 30, 2017.”  The following are some of the factors the company claims to have impacted negatively on the cash flow:

1. Occupancy challenges in the senior housing market.
2. Labor costs in company investments increased due to wage increases and reduced availability of qualified workers increasing operating expenses.
3. Negative pressures on cash flow for skilled nursing industry resulting in restructuring leases or replacing tenants and reducing rental income.
4. Operator transitions at some properties which resulted in short-term disruption in operations and occupancy.

NorthStar Healthcare began slowly decreasing their dividends and as investors have reported to us, their broker/dealers explained to them, the reduction in their monthly distribution from NorthStar was to “protect” their investment and “preserve” their original capital investment. This was a shock to the investors and the last thing they felt was “protected,” especially now that the dividends have stopped completely.  Early redemption of a non-traded REIT can result in high fees that can lower the total return.
Due to the high risk involved in non-traded REITs, broker/dealers are obligated to disclose the risks of this highly volatile product.  A broker must assess the investor’s experience, knowledge, age, suitability and risk tolerance.
If you’ve suffered losses in NorthStar Healthcare due to the recommendations of your broker/dealer or financial advisor, contact Soreide Law Group and speak to an experienced securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.
Soreide Law Group works on a contingency fee and represents our clients nationwide before FINRA.