Non traded real estate investment trusts have a history of fraudulent acts. Investors have lost millions due to false portrayals of companies that appear to have value and promise but actually don’t.
We found the following article in Investment News on this topic interesting and informative. We hope you do too.
Schorsch REIT listing a billion-dollar disaster for investors
The share price of American Finance Trust Inc. has plunged since trading began on July 19, and advisers deserve answers
The history of nontraded real estate investment trusts is littered with stories of companies that appear to have value and promise one day only to reveal a hideous portrait the next.
Several REITs that raised money in the years before the 2008 credit crisis and stock market crash repeatedly proved this rule. Sold by a broker for $10 per share in 2005 or so and listed on a client’s account statement for the same amount for years, those REITs’ value plummeted in 2009, 2010 and 2011.
Known as zombie REITs, these real estate companies dug their own graves by overpaying for real estate at the top of the market, taking on bad debt and paying high fees to their management.
Some of the REIT managers who saw their companies take savage hits in value included Behringer Harvard, Cornerstone, Inland and KBS.
As regular readers of Investment News know, we covered the collapse of these companies closely. Financial advisers in the mid-2000s promised many of their clients that investing in nontraded REITs was reasonable and stable. Real estate never lost value, was the pitch, combined with promised returns annually of 6% to 7%.
For their trust, investors lost millions. Read the Full article here.
This case provides a good example of the need for investors to research the companies in which and through which they are investing. The Securities Attorneys at Peter C. Rageas are experienced in all type of securities litigation, investment fraud, stock broker negligence and more! If you have questions about investment fraud, financial schemes, broker misconduct, or about your broker’s management of your account, please contact our Securities Law Firm at: 313-334-7767 for a Free case evaluation.