Michael Schrag
Michael has over 20 years of experience representing individual and small business plaintiffs against the world’s large financial institutions, including Visa, Mastercard, and Chase.
Getting out of a non-traded real estate investment trust, or REIT, can often be rather difficult and expensive. Once a REIT is closed to new investors, the board of directors of the REIT can suspend the redemption policy. If this happens, investors have limited options available for selling their non-traded REIT shares. This can be extremely problematic if the value of the REIT begins to decline, and can cause investors to sell their shares on the secondary market at a discount; losing a substantial amount of their investment in the process.
With limited ways to recover their investment, many investors may feel as though they have no where to turn. That’s where they’re wrong. As an investor, you may have legal options to recover your losses. Get a free case evaluation from a securities lawyer to learn more.
Find out how you may recover your losses. Get a free and confidential consultation.
Real estate investment trusts, or REITs, are companies that own or finance income-producing real estate from a variety of property sectors. These REITs are created to pool the money of many investors and invest in real-estate such as hospitals, healthcare facilities, hotels, office buildings, and even infrastructure.
Non-traded REITs are REITs that are not sold on a national securities exchange. Unlike publicly traded REITs, these funds are often illiquid, and can remain illiquid for up to eight years or more after the initial purchase date. Additionally, the board of directors of the REIT can suspend redemptions or stop distribution payments during this time, significantly harming investors in the process. According to Investopedia:
The value of the investment made into such an REIT could have decreased or become worthless at the time the program is liquidated.
While some non-traded REITs can pay high distributions, other non-traded REITs come with a variety of risks and have resulted in substantial losses. If you had your REIT distributions suspended, had your investment value decrease, or are unable to redeem your shares, you may have a claim. Contact us today to learn more about recovering your losses.
Visit our FAQs to learn more about non-traded vs. traded REITs.
Many investors have reported being sold non-traded REITs without fully understanding the risks associated with these investments. Here are a few key facts about non-traded REITs that REIT investors should look out for:
Stock brokers and financial advisors have a duty to disclose any risks related to an investment, and recommend only suitable investments for a person’s age, risk tolerance, and investment experience. If your financial advisor or stock broker recommended a non-traded REIT to you, and you ended up losing money or remain stuck in the REIT as a result, you may be a victim of REIT fraud. Speak with an experienced securities lawyer to learn how you may recover your losses.
Since most non-traded REITs are illiquid, there are often restrictions to redeeming and selling shares. While a REIT is still open to public investors, investors may be able to sell their shares back to the REIT. However, this sale usually comes at a discount; leaving only about 70% to 95% of the original value.
Once a REIT is closed to the public, REIT companies may not offer early redemptions. If the REIT does offer early redemptions, these redemptions often result in high fees that may actually lower the total returns. Redemptions are also typically limited and may price shares below the purchase price, and even below the current price. Additionally, these redemptions can be suspended at any point by the REIT’s board of directors.
With limited redemption options, investors’ money can be tied up in the REIT for a long period of time. If the REIT suspends its redemption program, investors may have no option but to turn to selling their shares to third parties on the secondary market.
A lot can happen in the amount of time that a REIT is illiquid. If a REIT begins to perform poorly, investors may seek to get their money back early. REITs that stop offering redemptions leave shareholders with limited options, often forcing investors to sell their shares on the secondary market at a steep discount.
The good news, however, is that this may not be the investor’s only option. Investors who remain tied up on their non-traded REIT, and lose a significant portion of their investment as a result, may be able to pursue legal claims to recover their losses. Investors may be eligible to join a class action against the non-traded REIT, or may even be able to file an individual arbitration claim. The legal options available vary depending on an investor’s individual case. Speak with an experienced attorney for free to learn how you can recover your losses.
Recently, many investors have reported significant losses from certain REIT investments. Some of these investments reported decreased net asset values (navs) and many suspended distributions and redemptions. Additionally, these investments have received tender offers extremely below the original, and even current, value. Some of these investments include:
If you invested in any of these REITs, or others, you may be eligible for monetary recovery. Find out how you can avoid selling your shares for a discount.
Gibbs Law Group is currently investigating a number of non-traded REITs on behalf of shareholders. These REITs include:
If you invested in any of these REITs, or others, we may be able to help. Speak with a lawyer to learn more about our REIT lawsuits.
Our securities lawyers have recovered over a billion dollars on behalf of our clients against behemoths, such as Chase Bank, Mastercard, and Anthem Blue Cross Blue Shield. Read more about our results.
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Scott focuses his law practice on securities arbitration and litigation and plaintiff-side class action litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others.
Michael has over 20 years of experience representing individual and small business plaintiffs against the world’s large financial institutions, including Visa, Mastercard, and Chase.
Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.
David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.
Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.
Gibbs Law Group’s financial fraud and securities lawyers have more than two decades of experience prosecuting fraud. The firm has successfully litigated against some of the largest companies in the United States, and has recovered more than a billion dollars on clients’ behalf.
Gibbs Law Group attorneys have fought some of the most complex cases brought under federal and state laws nationwide, and have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California, Top Plaintiff Lawyers in California, The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).
Silver Law Group is a team of securities lawyers, forensic accountants, and support staff who are dedicated to helping investors recover losses through securities arbitration and litigation.
The firm is led by Scott Silver, a former Wall Street defense attorney who has been representing customers in securities and investment fraud cases since 2002. Scott is admitted to practice in New York and Florida and the firm’s FINRA arbitration attorneys represents investors nationwide.
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