What is REIT? | Learn About Nontraded REITS | REIT Lawsuit Information
Non-Traded REIT Investigation
Have you suffered losses in a non-traded REIT (Real Estate Investment Trusts)? Billions of dollars worth of shares in nontraded REITs have been sold to investors with rosy promises of price stability and steady returns. However, many non-traded REITs have fallen short of those promises, with some severely restricting, and in some cases completely suspending, dividend payments to investors indefinitely. When distributions from non-traded REITs, such as Retail Properties of America, Inc., formerly Inland Western, and KBS REIT I or KBS Real Estate Investment Trust I, are suspended or restricted, the investors who rely on their income often have no choice but to sell their shares on the secondary market, usually for far less than their initial investment.
For over 33 years, Gilman Law LLP has represented investors in all major aspects of securities litigation, including stock manipulation, securities fraud, and shareholder rights violations. Our securities fraud lawyers are offering Free Legal Consultations to any investor who suffered financial losses in non-traded REITs. If you or someone you know purchased shares in non-traded Real Estate Investment Trusts (REITs), and you’re concerned about the investment, we urge you to contact our Real Estate Investment Fraud Lawyers today.
Concerns Surrounding Non-Traded REITs and REIT Lawsuit Information
Non-traded REITs pool the capital of numerous investors to purchase a portfolio of properties which a typical investor might not otherwise be able to purchase individually. Generally, non-traded REITs hold the purchased assets for a fixed amount of time — usually seven to 10 years — and will either sell off the properties or do an initial public offering at the end to exit the fund and deliver returns to the shareholders. Investors are paid a regular dividend while the REIT holds the assets.
Non-traded REITs have a number of issues that make them unsuitable for many investors. For one thing, the fees associated with non-traded REITS are typically much higher than their traded REITs, which can cause investors to lose up to 15 percent of their principal before it is even invested. While the regular income promised by a non-traded REIT’s can make them very appealing, it’s important to understand that periodic distributions are often heavily subsidized by borrowed funds and include a return of investor principal. Distributions can also be suspended for a period of time or halted altogether.
Many non-traded REITs have not lived up to promises of price stability. In February 2009, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 09-09, which requires REITs to re-assess the value of their shares no later than 18 months after the conclusion of the offering. Since then, some REITs that have re-assessed their shares in accordance with the Notice have had to notify investors that their shares are worth far less than the original purchase price. This has caused investors in non-traded REITs to sustain billions of dollars in losses. At the same time, some REITs have either severely restricted or frozen redemptions, leaving investors without a means of stemming their losses.
Most non-traded REITs place limits on the amount of shares that can be redeemed prior to liquidation. Additionally, the redemption price is generally lower than the purchase price, sometimes by as much as 10 percent. Because they are not traded on a public exchange, it can be difficult to assign an accurate valuation to the shares of non-traded REITs. As such, selling shares in a non-traded REIT on the secondary market is difficult, and generally results in losses.
Legal Help for Investors in Non-Traded REITs
Gilman Law LLP has extensive experience representing both individual and institutional investors in securities class action lawsuits, and has recovered over a billion dollars for its clients. Our securities fraud lawyers are ready to assist investors who have suffered losses in non-traded REITs and other Real Estate Investment Trusts. Please submit our Free Consultation Form for a Free Case Review or CALL TOLL FREE (888) 252-0048.