Investmentnews.com recently published a list of the largest non-traded REITs by invested assets. President of MTS Research Advisors gave quoted commentary on the status of non-traded REITs in general. Stubben notes that while some nontraded REITs “have shown strong operating performance throughout their history, the majority of closed nREITs have seen significant negative impacts to their real estate operations.”
The real estate markets nationwide have seen down years since the bubble burst around 2008 and Stubben attributes the nontraded REIT’s struggles to this. He said, “As a result, the market values of their assets have declined, and these nREITs have experienced declines in occupancies and rents.” Stubben does note that as the markets stabilize, some nontraded REITs may begin to move in a positive direction, but that “the total return of these closed nREITs has been significantly impacted.”
The White Law Group has been involved in many securities arbitration cases involving non-traded REITs over the last couple of years. As indicated above, many of the investments have declined significantly in value. Additionally, we have found that often brokers misrepresented the investments and their associated risks. In many circumstances brokers represented non-traded REIT investments as safe and secure.
Another major issue with these investments has been liquidity; brokers are required to inform investors about the liquidity of their investments. Nontraded REITs are illiquid investments not bought and sold on any public exchange. Many of the struggling non-traded REITs have suspended their redemption programs making getting out of the investments extremely difficult.
Financial professionals and their firms have a fiduciary duty to perform the necessary 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. Failure to adequately describe the liquidity and risks of nontraded REIT investments may, in some cases, make the broker and/or brokerage firm liable in FINRA claims to recover investment losses.
Here is the list of the largest nontraded REITs by invested assets from the investmentnews.com (full text with detailed information on assets and pricing available here: http://www.investmentnews.com/article/20111115/CHART02/111119947)
1. Inland American Real Estate Trust
2. Inland Western Retail Real Estate Trust
3. Wells REIT II
4. Behringer Harvard REIT I
5. Corporate Property Associates 16 Global
6. Cole Credit Property Trust II
7. Dividend Capital Total Realty Trust
8. Corporate Property Associates 15
9. CNL Lifestyle Properties
10. KBS Real Estate Investment Trust
11. KBS Real Estate Investment Trust II
12. Hines Real Estate Investment Trust
13. Healthcare Trust of America
14. Apple REIT Nine
15. Apple REIT Eight
16. Apple REIT Seven
17. Apple REIT Six
18. Lightstone Value Plus REIT
19. Apartment Trust of America
20. Cole Credit Property Trust I
If you are concerned about an investment you made in non-traded REIT and would like to speak to a securities attorney about your ability to recover investment losses 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.