According to reports, Behringer Harvard REIT I, which has $4.4 billion in assets, was sued recently in U.S. District Court for the Northern District of Texas by Lillian Hohenstein, an investor who bought 1,275 shares of the trust from 2004 to 2008. The complaint is the first step in forming a class action against the REIT, Behringer Harvard Holdings LLC, Robert Aisner, chief executive and president of the holding company, and other Behringer Harvard executives.
Behringer Harvard is one of more than a half dozen large nontraded REITs that has seen its value decrease significantly in the wake of the real estate collapse. It is currently valued at $4.64 per share, versus the $10 per share price of its three offerings in 2003, 2005 and 2006.
The complaint apparently alleges that it has “sought to mask the poor performance of [the REIT] by paying investors back with their own money, while at the same time draining the company of millions of dollars” for Behringer Harvard and its executives.
The complaint further alleges that two related companies, asset manager Behringer Advisors and property manager HPT Management Services LP, have collected, respectfully, $104 million and $77 million in fees.
The complaint also focuses on the REIT’s inability to pay for its distribution, or dividends, from “funds from operations,” which is the measure of cash generated by a REIT.
This suit may be another option for burned Behringer Harvard REIT I investors to recover their losses.
Another option being actively pursued by The White Law Group is a FINRA arbitration claim against the brokerage firm or financial professional that recommended the Behringer Harvard investment.
The White Law Group is currently representing many non-traded REIT investors, including many investors in Behringer Harvard REIT I, in claims against the brokerage firms that recommended these products.
Those claims generally involve claims that the broker-dealers failed to perform adequate due diligence on the REITs before offering them for sale to their clients and that the brokerage firms failed to determine whether the investments were appropriate in light of their clients age, investment, experience, net worth, and tolerance for risk.
Non-traded REITs are generally high risk investment, but financial advisors often sell them as low-risk, conservative investments.
If you are concerned about your Behringer Harvard REIT 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, visit https://www.whitesecuritieslaw.com.