Recovery of Cornerstone Core Properties REIT Losses

Thursday, March 29th, 2012

Are you concerned about your investment in Cornerstone Core Properties REIT?  If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.

It is being reported that investors in the Cornerstone Core Properties REIT Inc. were told this month by the company that the shares, once valued at $8, are now worth $2.25. According to a letter sent out by Cornerstone Core Properties to its investors, “the estimated per-share value has been adversely affected by the recent global economic downturn, negatively impacting our small business tenant base, which has resulted in approximately $43 million of previously announced impairment charges recorded in the second and third quarters of 2011.”

Apparently, Cornerstone Core Properties REIT suffered a sharp decline in tenant occupancy (tenant occupancy of the REIT’s retail properties was 69% at the end of last year, compared with 92% at the end of 2008). Additionally, the sponsor of the REIT had some regulatory issues that precluded the sponsor from raising the necessary capital to properly fund the REIT.

This is just more bad news for investors in non-traded REITs.

FINRA recently announced that it is paying close attention to the sale of non-traded REITs and, in particular, the ways in which broker/dealers marketed and sold the products to investors.  Even though REITs can be risky and are often illiquid, in many cases, broker-dealers marketed these investments as safe and secure.

REITs typically pay a high commission – often as much as 10-15% (which often explains the stockbroker’s motivation in recommending the REIT investment to the investor).

Due to the relatively high interest or dividend offered by non-traded REITs like Cornerstone Core Properties REIT, retired investors are often attracted to these products.  Unfortunately, in addition to being risky investments, non-traded REITs are also illiquid (limiting investors’ ability to access their own money for unforeseen expenses).

Another problem with non-traded REITs is that broker-dealers are not required to frequently update the current price of the investment.  This often leads investors to believe that their REIT investment is doing well even though the widespread real estate market collapse would indicate otherwise.

The White Law Group is currently representing numerous Cornerstone REIT investors in claims against the brokerage firm that recommended the REIT to these investors.

Brokerage firms have a fiduciary duty to its clients to perform adequate due diligence on an investment prior to recommending it for sale to its clients, as well as to ensure that any investment recommended is appropriate in light of the investor’s age, investment experience, net worth, and investment objectives.  Given what is now known about Cornerstone Core Properties REIT (and the many problems with this offering), it is clear that the brokerage firms that sold this investment failed in its fiduciary duty to its clients.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Cornerstone Core Properties through a FINRA arbitration claim against the brokerage firm that recommended the investment, please contact the REIT fraud attorneys of The White Law Group 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, visit http://www.whitesecuritieslaw.com.

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