Oaktree REIT Securities Investigation
The White Law Group is investigating potential securities claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments, like Oaktree REIT. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
Oaktree REIT, Inc., sponsored by Oaktree Capital Management is a non-traded Real Estate Investment Trust that reportedly seeks to invest in “a diversified portfolio of income-producing real estate and real estate-related debt investments,” according to its website.
The company has declared a slightly lower net asset value per share for its Class S and Class I common stock, as of August 31, 2020, according to filings with the SEC.
In June we told you the REIT announced plans to enter into a $125 million line of credit with an affiliate of its sponsor, Oaktree Capital Management, L.P. Oaktree REIT further noted at that time that it collected 94% of April multifamily rents, with 3% of rent subject to payment plans, and 87% of April office rents, with 5 of its 49 office tenants requesting rent relief.
Oaktree noted that the lower NAV was driven by modest write downs on its real estate equity investments and debt liabilities, which were partially offset by gains on its real estate-related debt investments. Rent and interest income collections for August collections were at 93 percent compared to 95 percent the prior month after accounting for contractual rent deferrals of 1 percent for August and 2 percent for the prior month.
The NAV for Class S shares at $10.30 per share and its Class I shares at $10.35. The prior reported NAV Class S was $10.33 and Class I shares at $10.36 each. Shares were originally priced at $10.00 each, plus different fees and selling commissions.
Complex, High Risk Investments
Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.
Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market. Brokers have an opportunity to earn high commissions—sometimes as high as 15% — on non-traded REITs. This may provide some brokers with enough incentive to make unsuitable investment recommendations.
Further, non-traded REITs generally lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.
Filing a Complaint against your Brokerage Firm
If you are concerned about your investment in Oaktree REIT, The White Law Group may be able to help you. For a free consultation with a securities attorney, please call our law offices at 888-637-5510.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.