Moody National REIT II Suspends Offering, Distributions, SRP Due to COVID-19 Pandemic
Are you concerned about your investment in Moody National REIT II Inc.? If so, The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
Moody National REIT II is a non-traded real estate investment trust (REIT) that invests in hotel and securities. The REIT recently announced to shareholders due to the global coronavirus (COVID-19) pandemic there is a “rapidly deteriorating demand across the hotel sector,” causing the company to temporarily suspend the company’s public offering and distribution payments, effective immediately. The distribution reinvestment plan and share repurchase program will be suspended, as of April 6, 2020.
Update on May 12, 2020, More Bad News for Investors
According to a letter to Moody REIT shareholders, Mackenzie Realty Capital has just launched a tender offer to purchase shares of the REIT for just $5.00 per share. This may mean significant losses for investors as the original purchase price was $25.00 per share.
According to Mackenzie’s offer letter, Moody plans to complete a liquidity event within three to six years from the termination of its IPO. Although the IPO was recently suspended due to the impact of COVID-19, the board may choose to reinstate it in the future; potentially lengthening the timeframe for stockholder liquidity.
Recovery of Investment Losses
The White Law Group continues to investigate the liability that brokerage firms may have for unsuitably recommending high risk non-traded REITs to investors.
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
The trouble with non-traded REITs, like Moody National REIT II, is that they involve a high degree of risk. They are also typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.
Non-traded REITs are also known for high sales commissions and due diligence fees. Brokers have an enormous incentive to push these products to unsuspecting investors who do not fully understand the risks. Sometimes brokers misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.
If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.
If you are concerned about your investment in Moody National REIT II or another non-traded REIT, please contact The White Law Group at 1-888-637-5510 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. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.