Posts tagged ‘REIT attorney’

KBS REIT I Drops More Than 50%

Have you suffered investment losses in KBS Real Estate Investment Trust?  If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.

The White Law Group continues to investigate potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase risky non-traded REIT investments, such as KBS REIT I.

KBS REIT I is a non-traded REIT that closed its initial public offering on May 31, 2008 for $10 per share. Unfortunately for many investors the value of the KBS REIT has dropped significantly. According to a recent document filed with the Securities and Exchange Commission (SEC), on December 18, 2013, the Company’s board of directors approved an estimated net asset value of $4.45 per share (a drop of over 50% from the original $10/share).

Non-traded RIETs, like KBS, are high risk complex investment products intended for institutional and sophisticated investors

The problems that often arise these types of non-traded REITs generally involves the failure of broker-dealers to adequately disclose the risks and illiquidity of these investments.  Nontraded REITs like KBS are also extremely high commission products, incentivizing unscrupulous advisors to push these products regardless of whether the investments are appropriate for their clients.

Broker-dealers have a fiduciary duty to perform adequate due diligence on any investment that they recommend and to make recommendations that are suitable given the client’s age, investment experience, net worth, and investment objectives. If a broker-dealer or one of their registered representatives fails in this responsibility, they can be liable for investment losses in a claim through FINRA dispute resolution.

If you suffered losses investing in KBS REIT I and would like to discuss your litigation options,please call The White Law Group at 312-238-9650 for a free consultation.

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.

Investigation into Cole Credit Property Trust III

Have you suffered losses as a result of an investment in Cole Real Estate Investments, formerly, Cole Credit Property Trust III? If so, the attorneys of The White Law Group may be able to helps.

According to their website, Cole Real Estate Investments owns over 1,000 properties throughout the US with over $7 billion in gross assets and it actively manages more than $12 billion in commercial real estate. Now, publicly traded under the ticker COLE, the company was successfully listed on the NYSE this past June.

According to Investment News, earlier this year non-traded REIT, Cole Credit Property Trust III, merged with their asset manager Cole holdings to form the publicly traded company Cole Real Estate Investments Inc. The whopping $127 million ” internalization fee” they paid themselves and founder, Christopher Cole, has sparked criticism from some shareholders and financial advisers.

This same report indicates that one of the largest networks of independent broker-dealers, Advisor Group, has terminated their selling agreement with Cole, in part due to this “internalization fee.” In an internal email to their broker-dealers Advisor Group apparently stated, “While this internalization transaction appears to have been legally permissible, we believe the failure to obtain shareholder consent was not consistent with industry standards for related party transactions of this nature and this internalization transaction failed to comply with our standards of appropriate corporate governance.”

Many investors in non-traded REITs have suffered significant losses in their investment. From what is known about non-traded REITs it appears that some broker-dealers may have over-concentrated clients portfolios in these illiquid investments and misrepresented the risks involved.

In addition, non-traded REITs are arguable inappropriate investments for retirees or individuals who were nearing retirement since investors could not access their money for unforeseen circumstances , such as medical expenses. To compound the problem, the lack of a secondary market significantly limits an investors potential to sell.

If you have concerns about your Cole III investment or another non-traded REIT and would like to discuss your litigation options with a securities attorney, please call The White Law Group at 312-238-3690 for a free consultation.

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

To learn more about The White Law Group, visit www.WhiteSecuritiesLaw.com.

Update on Proposed REIT Regulations

For nearly two years, the Financial Industry Regulatory Authority (FINRA) has been working on revisions to Rule 2340 which would change how brokerage firms value per-share REITs on client account statements. According to Investment News, FINRA proposed to two options on how brokerage firms could use to report per-share estimated value.

“In the first scenario, a broker-dealer simply would not be required to include a per-share estimated value of an unlisted private placement or REIT in a customer account statement.

In a second, a broker-dealer could rely on a valuation if done by one of three methods: an independent, outside valuation service performed at least once every three years; a valuation handled by any service conducting valuations according to a methodology disclosed in the prospectus; or, for two years after first investing, a “net investment,” valuation that consisted of the offering price minus cash distributions to investors, and “organization and offering expenses” funded through borrowing or offering proceeds. ”

This is a step in the right direction. Currently, the value reported for a REIT can remain the same for many years, despite the actual performance of the REIT. The first scenario, which excludes per-share estimated vales on clients account statements, would help prevent investor from having a false sense of security.

The various options available with scenario two would require the per-share estimated value to be updated every two to three year, and would take expenses and other costs into consideration. Ultimately, this would provide clients with a more accurate value of their investment.

The White Law Group has been following FINRA’s regulation proposal for nearly two years (here) and will continue to provide updates on all regulation changes that aim to protect investors.

If you have invested in a non-traded REIT and are concerned about your investment please call the securities attorneys of The White Law Group at (312) 238-9650 for a free consultation.
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  http://www.whitesecuritieslaw.com.

KBS REIT I Valuation Drops Again and Signals More Trouble for Investors

Investors in the popular non-traded REIT, KBS Real Estate Trust Inc. (KBS REIT I), were reportedly notified on Monday that the value of their shares is now estimated by the company at $5.16. The new valuation represents a 29% drop from the last change to the valuation in late 2009 and a nearly 50% drop since shares of KBS REIT I were initially offered at $10.00. Additionally, KBS investors were told that they would no longer be receiving any distributions. KBS REIT I is just the latest major non-traded REIT to see a drop in its valuation in recent months as many of these investments have struggled with a difficult real estate market over the last couple of years.

This most recent valuation will likely be troubling to many investors in the KBS non-traded REIT. If you invested in KBS REIT I and are wondering if you may have recourse to recover your investment, The White Law Group may be able to assist you in pursuing recovery of your nontraded REIT damages through FINRA arbitration process. The Financial Industry Regulatory Authority (FINRA) continues to pay close attention to issues related to non-traded REITs, including how they are sold and valuated.

The White Law Group has represented many investors who have struggled with non-traded REIT investments, including KBS Real Estate Investment Trust, Inc. (KBS REIT I), over the past few years in the FINRA dispute resolution claims.

The firm has seen several issues commonly arise around how non-traded REITS are sold and represented to investors. In many cases the risks associated with nontraded REITs were not adequately represented before purchase and investors have often been over-concentrated in this type of real estate investment. In some cases, the fact that advisors receive relatively high commissions for the sale of nontraded REITs compared to other products may have contributed to some investors being unsuitably invested in non-traded REIT investments. Finally, it seems common that the illiquid nature of non-traded REITs has not been made clear to some investors. Investors in nontraded REITs, like KBS REIT I, that have had redemption programs suspended may have difficulty selling their investments or suffer a serious loss on the secondary market.

Brokerage firms and financial advisers 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 a broker or brokerage firm fails in this responsibility, investors may have an actionable claim to recover their investment losses in a claim through FINRA dispute resolution.

If you are concerned about your investment in KBS Real Estate Investment Trust, Inc. (KBS REIT I) or another nontraded REIT investment and would like to speak to a securities attorney about potential to recover your investment losses through FINRA dispute resolution 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.

Investigation into potential for recovery of David Lerner and Apple REIT investment losses (Update)

The White Law Group is continuing to investigate and analyze how investors have been sold the Apple series of REITs by David Lerner Associates, Inc. The firm has spent the last few months reviewing documents and information regarding the Apple REIT investments sold by David Lerner and determining how best to assist investors in recovering losses incurred as a result of their investing in Apple REIT.

Here is a recap of the major points that our investigation has uncovered:

(1) In May 2011, FINRA launched an investigation into David Lerner’s sales practices with respect to Apple REITs;
(2) In June 2011, multiple class actions were filed against David Lerner and Apple REIT raising similar allegations as those raised by FINRA;
(3) David Lerner recently changed the way Apple REITs are valued on their account statements – stating only that the REITs are “unpriced,” and acknowledging for the first time that the value may not be what the investor paid for the shares;
(4) Apple REIT investors have received offers of $3/share and the alleged book value of certain Apple REITs is approximately $7/share.

FINRA has paid particularly close attention to its regulations with regards to non-traded REITs since they initially launched their investigation into David Lerner’s sales practices in May. They have recently discussed and proposed changes in regulations revolving around the valuation of non-traded REITs and also how the price of the shares are to be listed on customer account statements.

Additionally, Bruce Kelly of the investmentnews.com in a recent article states, “An eye-opening analysis of the “distributions” of nontraded REITs sold exclusively by David Lerner Associates Inc. shows the REIT’s property investments largely underperformed the level required to pay promised dividends to investors. Indeed, the analysis claims that the REITs consistently borrowed from a line of credit and used distributions investors were recycling back into the real estate investment trust to meet the targeted dividend payout.”

The analysis mentioned above by the investmentnews.com is based on an amended class action complaint filed by investors recently in New Jersey federal court. The original class complaint was filed in June. The complaint alleges that “…the distribution paid to investors did not match the level of income generated from the various Apple REITs…” and that “Brokers at David Lerner allegedly told clients that the Apple REITs were safe conservative investments that would protect their savings from the volatility of the stock market.”

The complaint reportedly further alleges that David Lerner Associates and the other named defendants, “paid distributions without regard to profitability, even as they acquired properties at prices they knew could not conceivably justify the level of distributions they were paying.”

Based on the foregoing, The White Law Group is reviewing claims against David Lerner on behalf of investors in Apple REIT for fraud, negligence, negligent supervision, and breach of fiduciary duty. These claims are based on (1) David Lerner’s alleged failure to perform the necessary due diligence on the Apple REITs prior to offering them for sale to investors, (2) its alleged failure to adequately disclose the relationship between the firm and Apple REIT; (3) its alleged failure to disclose the decline in value of the previous Apple REITs sold to investors when offering Apple REIT 9 and Apple REIT 10 to investors; and (4) the alleged unsuitability of a non-traded REIT for certain investors (including retirees, investors interested in liquidity, and investors adverse to risk).

To determine whether you may be able to recover investment losses incurred as a result of your purchase of an Apple REIT, please contact 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, please visit our website at http://www.whitesecuritieslaw.com.