Zamansky LLC is investigating claims by investors in non-publicly traded or unlisted real estate investment trusts (REITs). Non-traded REITs do not trade on a stock exchange, and are relatively illiquid investments. Since 2000, unlisted REITs raised nearly $60 billion from investors and some of the largest unlisted REITS are managed by Behringer Harvard, Inland Western, Inland America, Wells Real Estate Trust, Lightstone, CNL Income Properties, Hines Real Estate Trust, W.P. Carey, Apple, Cole Credit Property Trust, Piedmont Office Realty Trust and American Real Estate Trust.
In March 2009, the Financial Industry Regulatory Authority (FINRA) officially opened an investigation into non-traded REITs with an examination of documentation and data from various brokers who sell the investments. FINRA is examining the compensation paid to brokers who sold unlisted REITs – which have raised nearly $60 billion since 2000. Specifically, regulators want to know if investors are being properly informed about the products at the time they buy into them, and if there were misrepresentations about fees, dividends and liquidity.
Because unlisted REITS have liquidity restrictions, many of these REITs have specific suitability guidelines for investors; typically, these are a minimum income of $70,000 and minimum net worth of $250,000. Unlisted REITs are not suitable for purchase by investors who do not meet these minimum guidelines, and may not be suitable for investors for other reasons as well. Another reason may be that the unlisted REIT is not a safe or conservative income-generating investment. FINRA is examining whether brokers sold unlisted REITs to investors when it was an unsuitable investment.
Recently, investors have taken losses on these REITs and may have legal claims for unsuitability and/or misrepresentation. For example, Behringer Harvard REIT I, which raised $2.9 billion from its 2003 launch to the end of its final offering in December 2008, has reduced its share value as of May 17 to $4.25, plus cut its annualized dividend rate to 1%, according to a regulatory filing. For countless investors, this revaluation has been a crushing blow financially.
If you have invested in unlisted REITs and believe that you may have a claim, please contact us.