March 10, 2017 Comments (0) Current Investigations

AR Global’s Healthcare Trust Inc. Decreases Shareholder Distributions

Benefit Street Partners Realty Trust
(Last Updated On: March 10, 2017)

Suffered losses investing in Healthcare Trust Inc.?

Are you concerned about your investment losses in Healthcare Trust Inc.? 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.

Healthcare Trust Inc. is a publicly registered non-traded real estate investment trust sponsored by AR Global (the successor business to AR Capital)

The White Law Group continues to investigate claims on behalf of investors that purchased investments such as Healthcare Trust Inc. and other non-traded REITs.  Specifically, the firm is investigating the liability that brokerage firms may have for improperly selling these high-risk, illiquid investments.

 Healthcare Trust Inc. decreased its annual distributions from $1.70 per share to $1.45 per share, effective April 1st, according to a filing with the Securities and Exchange Commission.

The reduction of the distributions represents a change in the annualized distribution yield, based on the original purchase price of $25.00 per share, from 6.8 percent to 5.8 percent, or a change from 7.6 percent to 6.5 percent based on the most recent estimated net asset value of $22.27 per share, as of December 31, 2015.

Last October Healthcare Trust Inc. completed its strategic review and plans to deploy additional capital to purchase healthcare assets and access additional debt sources, according to an investor presentation filed with the SEC.

According to the company, these plans are intended to grow earnings, increase the size of the portfolio, and better position the REIT for a liquidity event.

Healthcare Trust Inc. invests in multi-tenant medical office buildings and owns an 8.4 million-square-foot portfolio of 163 properties with a total purchase price of $2.3 billion. The company’s primary offering went effective in February 2013 and closed in November 2014 after raising $2.2 billion in investor equity.

The non-traded REIT expects to increase its leverage from 28 percent to roughly 40 percent on a debt to total asset – which it says is more closely aligned with publicly-traded healthcare REITs.

Problem with REITs

One of the major downfalls of REITs is the lack of liquidity. Non-traded REITs are not sold on the public market, therefore they lack liquidity. This prevents shares from being sold quickly and forces investors to search for a secondary market that is often very limited. The secondary market price is almost always significantly below the purchase price.

Many brokerage firms target investors that were retired or near retirement, often emphasizing the potential income the REIT may provide. Unfortunately, some brokerage firms failed to disclose that it is not uncommon for REITs to borrow money in order to make distributions. In addition, distributions are often merely a return of principle. REITs are complex high risk products that are not suitable for most investors.

Brokerage firms have a fiduciary duty to its clients to perform adequate due diligence on an investment prior to recommending it for sale. They must 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 non-traded REITs, it is clear that certain of the brokerage firms that sold this investment failed in its fiduciary duty to its clients.

If you suffered losses as a result of your purchase of Healthcare Trust Inc. or another AR Global offering please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.

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

For more information on the firm, please visit http://www.whitesecuritieslaw.com.