November 8, 2016 Comments (0) Blog, Current Investigations

Carey Watermark Investors 2 Investment Losses

(Last Updated On: June 27, 2017)

Are you concerned about your investment losses with Carey Watermark Investors 2 REIT? If so, The White Law Group may be able to help by filing a FINRA arbitration claim against the brokerage firm that sold you the investment.

The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation of high-risk non-traded REIT investments, like Carey Watermark Investment 2. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.

Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.

CWI is a non-traded REIT that seeks to provide investors with:

  • Income generation
  • Capital appreciation

There is a long list of risk factors on their website including the following:

This investment contains a high degree of risk, which is detailed in the Risk Factors section of the Carey Watermark Investors 2 Incorporated (CWI 2) prospectus. You should consider all of the risks described in the prospectus before you decide to purchase our securities, including the following:

  • There is no public market for our shares; a public market is unlikely ever to develop and we are not required ever to provide you with liquidity for your shares. If you are able to sell your shares before we complete a liquidity event, you will likely receive less than your purchase price.
  • This is a blind pool offering. We have not had any net income. We have a limited operating history and you will be unable to evaluate our complete investment portfolio prior to your investment.
  • Our advisor and the sub advisor will be paid substantial fees based on factors other than the quality of services provided, which may encourage them to use increased leverage or to make riskier investments. Our agreements with our advisor, the sub advisor and Carey Financial, LLC, the dealer manager, are not arm’s length agreements.
  • We will be subject to the risks of operating lodging properties and the lodging industry generally. Failure of lodging industry fundamentals to continue to improve may adversely affect our business strategy.
  • Our failure to qualify as a REIT would adversely affect our operations and ability to make distributions.

Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling  REITs – as high as 15%.  Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market. Unfortunately, in many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.

In addition to the high risks, non-traded REITs, like Carey Watermark Investors 2 often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.

For more information on this investigation see Recovery of Carey Watermark Investors Inc Investment Losses.

If you suffered losses investing in Carey Watermark Investors 2 REIT and would like a free consultation with a securities attorney, please call The White Law Group at (888) 637-5510.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.