ARC Healthcare III to Halt Distributions in August
Are you worried about your investment losses in ARC Healthcare Trust III? If so, The White Law Group may be able to help you recover your losses 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, and distributions for May and June were paid to stockholders in cash with no DRIP shares issued, according to SEC Filings.
More Bad News for Investors
Now, more bad news for investors- the board of ARC Healthcare Trust III Inc., approved a $17.64 net asset value per share of the company’s common stock. The original purchase price per share was $25.00.
The affiliated non-traded REIT Healthcare Trust Inc. is going through with the purchase of ARC Healthcare Trust III’s 19 properties for approximately $120 million. At the annual meeting, shareholders will vote on the asset sale as well as the board-approved plan of liquidation.
The ARC Healthcare III board decided to calculate the NAV per share based on the negotiated value attributed to the properties under the Healthcare Trust purchase agreement, rather than seek third-party appraisals. The board also considered the estimated costs and expenses of closing the 19-property sale and implementing the plan of liquidation.
The filing noted conflicts of interest inherent in the proposed asset sale and plan of liquidation. The advisors of ARC Healthcare Trust III and Healthcare Trust are both indirectly owned and controlled by AR Global Investments.
The Trouble with Non-traded REITs
The White Law Group continues to investigate claims on behalf of investors that purchased investments such as ARC 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.
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 ARC 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, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm, please visit https://www.whitesecuritieslaw.com.