May 23, 2017 Comments (0) Current Investigations

American Realty Capital Healthcare Trust III Tender Offer

American Realty Capital Healthcare Trust III
(Last Updated On: May 23, 2017)

Recovery of Losses in American Realty Capital Healthcare Trust III

Are you concerned about your investment losses in American Realty Capital Healthcare Trust III? 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.

American Realty Capital Healthcare Trust III is a publicly registered non-traded real estate investment trust sponsored by AR Global (the successor business to AR Capital). The company suspended the company’s distribution reinvestment plan at the beginning of May, according to a filing with the Securities and Exchange Commission. Distributions for May and June will be paid to stockholders in cash with no DRIP shares issued.

The White Law Group continues to investigate claims on behalf of investors that purchased investments such as American Realty Capital Healthcare Trust III 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.

Bad News for Investors

Now, more bad news for investors, Mackenzie Capital, a secondary market for private placements, has just announced a tender offer for $12.05 per share. The original offering price was $25.00 per share.

According to Mackenzie Capital’s offer letter, the share repurchase program for American Realty Capital Healthcare Trust III is oversubscribed. Requests to repurchase approximately 200,000 shares went unfulfilled earlier this year, and DRIP has been suspended during Strategic Review, further reducing funds available for repurchases.

 The Problem with Non-traded 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 American Realty Capital Healthcare Trust III 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.