Recovery of Investment Losses in Steadfast Income REIT
Have you suffered investment losses in Steadfast Income REIT? If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.
Steadfast Income REIT is a non-traded Real Estate Investment Trust (REIT) that closed its initial public offering on December 20, 2013. Steadfast Income REIT targeted established, stable apartment communities with operating histories with high occupancy and income levels across market cycles.
According to their website, Steadfast Income REIT’s objectives are to preserve, protect and return stockholders’ invested capital, pay attractive and stable distributions to stockholders and realize capital appreciation in the value of the investment over the long term.
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments, like Steadfast Income REIT. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
On May 8, Mackenzie Realty Capital extended a tender offer to investors in Steadfast Income REIT of just $7.08/share. Unfortunately for investors, the original purchase price was $10.00/share.
Steadfast Income REIT’s Share repurchase program is oversubscribed. According to Mackenzie’s offer, during the first nine months of 2016, 422,879 shares were submitted for repurchase. The company, however, honored just 289,397 shares. The program can only repurchase $2 million per quarter. Mackenzie is offering to purchase over $7 million.
The Problem with REITs
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.
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 Steadfast Income REIT 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.
If you suffered losses investing in Steadfast Income 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.