The White Law Group has been following the status of Cornerstone Heathcare REIT for over a year now. With each update, the outlook appears to get worse for investors in this non-traded REIT.
In a May 31, 2012 letter to investors, Cornerstone leads with the good news of the hiring of a new in-house real estate management team, stating that Cornerstone hopes the new COO/CFO and VP of Acquisitions and Asset Management “will advance us forward towards enhancing your shareholder value in Cornerstone Healthcare Real Estate Fund, Inc.”
The good news ends there, however, as Cornerstone announced that the investment in another property has failed to pay off and is actively marketed for sale. Since this property was purchased by the REIT out of bankruptcy, the fund holds a second mortgage and is therefore the secondary beneficiary of any sale. Cornerstone states their position thusly: “At this time, it is unlikely that we will recoup any portion of our investment from the sale of the property.”
The effect of this loss, according to the letter, is that the value of shares in Cornerstone Healthcare REIT has been reduced to $0.25 from the previous share price of $1.00 as of December 31, 2011. This news, along with the news that cash distributions are not being reinstated, continues to have devastating consequences on investors who were sold these funds with the promise of security and continued income.
Fortunately for investors, there may be a way for them to recover these losses. The White Law Group continues to file FINRA arbitration claims involving Cornerstone Healthcare REIT against the broker-dealers and financial professionals that recommended this investment.
Brokerage firms and financial professionals have a fiduciary duty to perform adequate due diligence on any investment prior to recommending it for sale to their clients. Based on what is known about Cornerstone Healthcare REIT, it appears clear that the firms and individuals that sold this REIT failed to perform the adequate due diligence and improperly recommended this REIT to their clients.
If you are concerned about your investment in the Cornerstone Healthcare Plus REIT (now known as Sentio Healthcare Properties, Inc.), or another Cornerstone Real Estate Funds product and would like to speak to a REIT fraud attorney, please call The White Law Group’s Chicago office at 312-238-9650 for a free consultation.
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.