February 11, 2019 Comments (0) Blog, Current Investigations

NorthStar Healthcare Income Suspends Distributions

NorthStar Healthcare Income  – Securities Investigation

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The White Law Group continues to investigate potential claims involving the liability that broker-dealers may have for improperly recommending high risk, non-traded REITs such as NorthStar Healthcare Income Inc. to investors.

According to recent filings with the SEC, NorthStar Healthcare Income Inc., a publicly registered non-traded real estate investment trust, has suspended the monthly distribution payments to stockholders, effective immediately.

The Board reportedly performed a thorough analysis of NorthStar Healthcare’s business, financial condition, liquidity sources and capital needs. According to the SEC filings, the Board believes it is prudent to “preserve capital and protect NorthStar Healthcare’s financial position by suspending distributions at this time.”

In December 2017, the company reduced its distribution rate from 6.67 percent to 3.31 percent on its $10.20 final offering price.

This comes just after an announcement on December 4, 2018, of the REIT’s revised estimated NAV per share of $7.10. This is a reduction of approximately 16.5% from the previous NAV per share of $8.50 per share as of June 30, 2017.

The board reportedly notes that there can be no assurance that distributions will be declared again in any future periods or at any particular rate.

In October 2018, the company informed shareholders that it will only repurchase shares in connection with the death or qualifying disability of a stockholder.

Secondary Market Listing Price

According to Central Trade & Transfer, a secondary market website, shares of NorthStar Healthcare Income Inc. were recently sold in January for just $4.76 per share. Unfortunately for many investors, it appears that the secondary market price would represent a loss on their initial capital investment. The original offering price was $10.00 per share.

Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.

Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.

High commissions could possibly be a motivating factor for unscrupulous financial advisors to sell the REIT regardless of whether the investment is in line with the client’s investment objectives and profile.  Moreover, the total commissions and expenses make it difficult for the REIT to perform in line with the market.

Free Consultation with a Securities Attorney

If you invested in a NorthStar Healthcare Income Inc. and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.

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, visit https://www.whitesecuritieslaw.com.