The White Law Group, LLC, a South Florida securities fraud, broker fraud, securities arbitration, investor protection and Chapter 7 bankruptcy law firm based in Boca Raton, Florida.

Posts tagged ‘Cornerstone Core Properties REIT investigation’

Recovery of Cornerstone Core Properties REIT Losses

Are you concerned about your investment in Cornerstone Core Properties REIT?  If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.

It is being reported that investors in the Cornerstone Core Properties REIT Inc. were told this month by the company that the shares, once valued at $8, are now worth $2.25. According to a letter sent out by Cornerstone Core Properties to its investors, “the estimated per-share value has been adversely affected by the recent global economic downturn, negatively impacting our small business tenant base, which has resulted in approximately $43 million of previously announced impairment charges recorded in the second and third quarters of 2011.”

Apparently, Cornerstone Core Properties REIT suffered a sharp decline in tenant occupancy (tenant occupancy of the REIT’s retail properties was 69% at the end of last year, compared with 92% at the end of 2008). Additionally, the sponsor of the REIT had some regulatory issues that precluded the sponsor from raising the necessary capital to properly fund the REIT.

This is just more bad news for investors in non-traded REITs.

FINRA recently announced that it is paying close attention to the sale of non-traded REITs and, in particular, the ways in which broker/dealers marketed and sold the products to investors.  Even though REITs can be risky and are often illiquid, in many cases, broker-dealers marketed these investments as safe and secure.

REITs typically pay a high commission – often as much as 10-15% (which often explains the stockbroker’s motivation in recommending the REIT investment to the investor).

Due to the relatively high interest or dividend offered by non-traded REITs like Cornerstone Core Properties REIT, retired investors are often attracted to these products.  Unfortunately, in addition to being risky investments, non-traded REITs are also illiquid (limiting investors’ ability to access their own money for unforeseen expenses).

Another problem with non-traded REITs is that broker-dealers are not required to frequently update the current price of the investment.  This often leads investors to believe that their REIT investment is doing well even though the widespread real estate market collapse would indicate otherwise.

The White Law Group is currently representing numerous Cornerstone REIT investors in claims against the brokerage firm that recommended the REIT to these investors.

Brokerage firms have a fiduciary duty to its clients to perform adequate due diligence on an investment prior to recommending it for sale to its clients, as well as to 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 Cornerstone Core Properties REIT (and the many problems with this offering), it is clear that the brokerage firms that sold this investment failed in its fiduciary duty to its clients.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Cornerstone Core Properties through a FINRA arbitration claim against the brokerage firm that recommended the investment, please contact the REIT fraud attorneys of The White Law Group at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

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

Potential for Recovery of Cornerstone Core Properties REIT Investment Losses (Update)

Have you suffered losses in Cornerstone Core Properties REIT (CCP REIT)? If you have, The White Law Group may be able to help you.

The White Law Group is currently investigating the sale of the REITs and Funds under the umbrella of Cornerstone Ventures Inc.’s Cornerstone Real Estate Funds. One of those investments is the Cornerstone Core Properties REIT or CCP REIT. We are reviewing how investors were sold this investment and how it was represented to them in order to determine how best to pursue recovery of their losses.

We first blogged about our investigation into Cornerstone Core Properties REIT in February, but have since obtained further information regarding the status of that investment.

In a letter to Cornerstone Core Properties REIT investors dated November 23, 2010 the CCP REIT Board of Directors outlined several decisions it had recently made with regards to the REIT.

The letter states that, “…over the period of time since the bulk of our investments were made there have been significant negative changes in the commercial real estate markets in which our industrial properties are located. While these changes have not been uniform, the downturn in the U.S. economy has had a negative impact on the CCP portfolio.” These troubles led to decreased occupancy rates overall and the bankruptcy of a tenant that accounted for 8.2% of the portfolio’s square footage in October of 2010.

The letter further states that in the 2^nd quarter of 2008, the Cornerstone Core Properties REIT Board “…recognized the difficulties forming in the commercial real estate market…” and tried to make moves to help the REIT, but states that these moves “have taken longer than anticipated” to improve the REITs situation.

In light of these difficulties the Board of the CCP REIT took action in ways it saw beneficial to the “…overall health of the REIT.” The Board suspended the offering of the REIT effective Novemeber 23, 2010 stating that they, “are not currently making or accepting offers to purchase shares of stock in Cornerston Core Properties REIT, Inc…” Additionally, they suspended the distribution reinvestment plan effective December 14, 2010. Finally, they cut distributions to shareholders effective December 1, 2010 “to a current annualized rate of $0.08 per share (1% based on a share price of $8.00) from the [then] current annualized rate of $0.48 per share (6% based on a share price of $8.00)…”

For investors these events appear to mean that not only don’t the investors have the ability to sell their principle investment, but the dividends of the investment have also been drastically decreased. Investors were left in a difficult position.

With this type of investment, illiquidity is always a possibility. However, for some investors, especially those who are retired or need a consistent income stream to live off of, being stuck in an investment without getting significant dividend returns can be devastating. These are risks commonly associated with this type of investment and if you are a retired or income needy investor, this investment recommendation may have been unsuitable for you.  In that case you may be able to recover your investment through FINRA arbitration by pursuing claims against the brokerage firm that recommended the investment to you.

Brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives.

If you are concerned about your investment in the Cornerstone Core Properties REIT (CCP REIT) or another Cornerstone Real Estate Funds product and would like to speak to a securities attorney, please call our Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.