The White Law Group has been following the nontraded REIT market, including Behringer Harvard REITs, very closely over the last few years. The firm has written about the industry, issues related to how nontraded REITs have been sold and represented by broker-dealers, and increased securities regulator interest in the investment vehicle on our securities fraud and investor protection blog. Further, The White Law Group has represented numerous investors in Financial Industry Regulatory Authority (FINRA) arbitration proceedings seeking to recover damages due to the purchase of non-traded REITs like the Behringer Harvard REIT I, Behringer Harvard Opportunity REIT I and the Behringer Harvard Multifamily REIT I.
Recently investmentnews.com published an article that indicated that Behringer Harvard Holdings Inc. is amidst “tough times.” It was reported that Behringer Harvard “has seen the valuation of its REITs and funds slide, and recently lost two key executives who successfully marketed Beh-ringer Harvard’s REITs to independent broker-dealers.” In addition to these issues, several broker-dealers that had sold Behringer Harvard products “…pulled the plug on their relationship…”
Investmentnews.com mentioned American Portfolios Financial Services Inc. and Securities America Inc. as two of the firms. American Portfolios Financial Services reportedly stopped selling the Behringer Harvard Multifamily REIT I last spring “because of concerns related to how the REIT was paying for its dividend.” A Securities America representative was quoted saying that they stopped the selling the company’s products in 2010 “as a result of [their] ongoing due diligence.”
Tony Chereso, of FactRight LLC, a due diligence firm that has looked into the nontraded REIT industry, was quoted by investmentnews.com saying “Broker-dealers don’t have confidence in Behringer Harvard.” He further said that that opinion also coincided with his firm’s opinion, “We’ve had a similar perspective and cautioned some of the broker-dealers we work [with] to look at the selling agreements…” A Behringer Harvard representative stated that they are not aware of any evidence to support the assessment of Mr. Chereso.
As we have reported previously, the estimated value of the Behringer Harvard Opportunity Reit I recently fell to $4.12 and joins another Behringer Harvard product, Behringer Harvard REIT I with a valuation under $5 (http://www.whitesecuritieslaw.com/2012/01/13/potential-for-recovery-of-behringer-harvard-opportunity-reit-i-investment-losses/). These declines of more than 50% from the par values are likely disappointing and disconcerting for many investors.
Nontraded REITs are a legitimate alternative investment for many investors, but they may not be right for everyone. Issues with liquidity have been particularly difficult for some investors and it seems, for many of those investors, the liquidity of the investments were not adequately described by their financial professional. Additionally, non-traded REITs have commonly been sold as safe investments, but they are, in fact, a risky investment reliant on the real estate industry.
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 a broker fails in this responsibility, investors may have an actionable claim to recover their investment losses in a claim through FINRA dispute resolution.
If you are concerned about your investment in a Behringer Harvard nontraded REIT like the Behringer Harvard REIT I, Behringer Harvard Opportunity REIT I, or the Behringer Harvard Multifamily REIT I and would like to speak to a securities attorney about your potential ability to recover losses through FINRA arbitration 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.
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