Have you suffered losses in Cornerstone Core Properties REIT (CCP REIT)? If you have, The White Law Group may be able to help you.
The White Law Group is currently investigating the sale of the REITs and Funds under the umbrella of Cornerstone Ventures Inc.’s Cornerstone Real Estate Funds. One of those investments is the Cornerstone Core Properties REIT or CCP REIT. We are reviewing how investors were sold this investment and how it was represented to them in order to determine how best to pursue recovery of their losses.
We first blogged about our investigation into Cornerstone Core Properties REIT in February, but have since obtained further information regarding the status of that investment.
In a letter to Cornerstone Core Properties REIT investors dated November 23, 2010 the CCP REIT Board of Directors outlined several decisions it had recently made with regards to the REIT.
The letter states that, “…over the period of time since the bulk of our investments were made there have been significant negative changes in the commercial real estate markets in which our industrial properties are located. While these changes have not been uniform, the downturn in the U.S. economy has had a negative impact on the CCP portfolio.” These troubles led to decreased occupancy rates overall and the bankruptcy of a tenant that accounted for 8.2% of the portfolio’s square footage in October of 2010.
The letter further states that in the 2nd quarter of 2008, the Cornerstone Core Properties REIT Board “…recognized the difficulties forming in the commercial real estate market…” and tried to make moves to help the REIT, but states that these moves “have taken longer than anticipated” to improve the REITs situation.
In light of these difficulties the Board of the CCP REIT took action in ways it saw beneficial to the “…overall health of the REIT.” The Board suspended the offering of the REIT effective Novemeber 23, 2010 stating that they, “are not currently making or accepting offers to purchase shares of stock in Cornerston Core Properties REIT, Inc…” Additionally, they suspended the distribution reinvestment plan effective December 14, 2010. Finally, they cut distributions to shareholders effective December 1, 2010 “to a current annualized rate of $0.08 per share (1% based on a share price of $8.00) from the [then] current annualized rate of $0.48 per share (6% based on a share price of $8.00)…”
For investors these events appear to mean that not only don’t the investors have the ability to sell their principle investment, but the dividends of the investment have also been drastically decreased. Investors were left in a difficult position.
With this type of investment, illiquidity is always a possibility. However, for some investors, especially those who are retired or need a consistent income stream to live off of, being stuck in an investment without getting significant dividend returns can be devastating. These are risks commonly associated with this type of investment and if you are a retired or income needy investor, this investment recommendation may have been unsuitable for you. In that case you may be able to recover your investment through FINRA arbitration by pursuing claims against the brokerage firm that recommended the investment to you.
Brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives.
If you are concerned about your investment in the Cornerstone Core Properties REIT (CCP REIT) or another Cornerstone Real Estate Funds product and would like to speak to a securities attorney, please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.