July 15, 2018 Comments (0) Blog, Current Investigations

Preferred Apartment Communities – Securities Investigation

Preferred Apartment Communities
(Last Updated On: August 9, 2018)

Investigating Potential Claims – Preferred Apartment Communities

Are you concerned about your investment in Preferred Apartment Communities? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

Preferred Apartment Communities is a multi-family REIT that has a portion of its portfolio in retail anchored by grocery stores and student housing. The company started selling nontraded redeemable preferred shares of its stock in 2011, according to reports.

The preferred shares can be redeemed after five years. Investors can sell their shares back to the company immediately after buying them but they must pay a redemption fee that decreases annually. For example, if an investor sells back the preferred shares during the first year of owning it, the redemption fee is 13%.

Instead of operating as a typical non-traded REIT, Preferred Apartment Communities has done somewhat of the reverse. It first listed the company, generated cash flow, and then launched an illiquid, nontraded investment, and uses cash flow to cover its dividend to both common and preferred stock holders. The company uses the proceeds of the preferred shares to acquire properties.

The Preferred Apartment Communities preferred share offering was quite popular with independent reps and their firms. It raised $101 million from investors in the first quarter of 2016 alone.

Unfortunately, the high fees and commissions for Preferred Apartment Communities are similar to a non-traded REIT at 7% in commissions and 4-5% in dealers’ fees.

Is Preferred Apartment Communities a suitable investment for you?

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for unsuitably recommending REIT investments, like Preferred Apartment Communities to investors.

Brokerage firms are required to perform due diligence on any offering they recommend and to ensure that all recommendations made are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives.

If a firm fails to perform due diligence or makes an unsuitable recommendation, the broker-dealer can be held responsible for any losses in a FINRA arbitration claim.

FINRA can help resolve problems and disputes through two non-judicial proceedings: arbitration and mediation. FINRA’s Dispute Resolution forum handles nearly all of the securities-related arbitrations and mediations in the United States.

If you have concerns regarding your investment in Preferred Apartment Communities and would like to speak with a securities attorney about your options, please call The White Law Group at 888-637-5510.

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 White Law Group and its representation of investors in FINRA arbitration claims, visit http://www.whitesecuritieslaw.com.

 

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