Securities Lawyers Blog
Previously, the securities lawyers of Gana Weinstein LLP reported on the decline in value of Healthcare Trust, Inc. a non-traded real estate investment trust (Non-Traded REIT). However, recent news reveals the health of Healthcare Trust may be in further decline. A tender offer on Healthcare Trust shares was recently made at only $12.11 per share – a significant loss on the original purchase price of $25.00. In more bad news for investors, the company lowered its annual distribution rate from $1.45 to $0.85 per share or a cut of over 40%. Had the company continued to pay the higher dividends those payments would have exceeded the cash flows from operations.
According to the firm’s website, Healthcare Trust is an investment trust which seeks to acquire a diversified portfolio of real estate properties focusing primarily on healthcare-related assets including medical office buildings, seniors housing, and other healthcare-related facilities.
Our firm handles where brokers recommend investments in direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.
According to studies, non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes. Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.
However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. These products have become so popular among brokers without providing any benefit to investors that many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs. Many states impose these limitations because its understood that that they provide virtually no benefit to investors in relationship to their risks.
Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. The investment lawyers at Gana Weinstein LLP represent investors who have suffered investment losses due to allegations of wrongdoing. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.