Eccleston Law Offices, P.C. represents represent individual and institutional investors to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.
Our attorneys are investigating the legal claims of those investors who have suffered losses investing in the Hines REIT family of non-traded real estate investment trusts (non-traded REITs).
Recent Problems with Non-Traded REITs such as Hines REIT
Non-listed real estate investment trusts (“REITs”) are designed to allow retail investors to participate in large commercial real estate development projects, such as shopping malls or hotel properties, that they could not otherwise participate in.
These non-traded REITs are typically managed by a founding sponsor, who earns fees for services they render such as managing or acquiring properties. These non-traded REITs raise money for these acquisitions by selling shares in the REITs to retail investors.
Non-traded REITs trend to attract unsophisticated investors who do not understand the extent of the risks involved in the investment, such as lack of liquidity, conflicts of interest, and high fees. Brokers who sell non-traded REITs can earn anywhere from 6-15% in commissions for selling these products. In some cases, due to the high commissions brokers and financial advisors may ignore their duty to recommend investments that are suitable for the investor in order to profit off of the sale of a non-traded REIT.
Non-traded REITs are typically sold at $10 or $11 per share, which is an arbitrarily set price that does not change unless the REIT gets revalued. Other than limited exit windows, investors can only redeem (exit) the investment when the REIT lists publicly, is acquired, or if the investor can find a private buyer. Non-traded REITs are supposed to have a limited life, usually not exceed 10 years, after which they are supposed to distribute the proceeds from the investments.
Brokers selling unlisted REITs have raised more than $59 billion since 2000, which has caused securities regulators to examine the sales practices of those brokers. In particular, securities regulators are focused on whether or not the sales were suitable for investors and whether the brokers failed to fully disclose the risks, fees and liquidity of the investments.
As a result of the economic turmoil of the past few years, investors have been filing securities arbitration claims after being hurt by share devaluations along with the suspension of share buyback and dividend programs in non-traded REITs. Some of the non-traded REITs that were forced to respond to lower occupancy rates and falling rents with reduced dividends or suspension of redemptions.
In response to the dividend reductions and redemption suspensions in these non-traded REITs, investors have been filing FINRA arbitration claims against the securities brokers or financial advisors who sold them the non-traded REITs in an effort to try to recover some of their losses.
Recovery Options For Investors
Investors who have suffered losses investing in non-traded REITs may be able to recover their losses through securities arbitration. The attorneys at Eccleston Law are representing investors who have suffered losses in non-traded REITs such as Hines REIT in FINRA arbitration proceedings. If you are investor who has suffered losses investing in Hines REIT and would like a free, no obligation consultation about your recovery options, please contact one of our attorneys at 312-332-0000.