Investors of Hospitality Investors Trust Inc. may be able to recover losses
Did your financial advisor recommend investing in Hospitality Investors Trust Inc.? If you have suffered losses, The White Law Group may be able to help you. It may be possible to recover your losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.
Hospitality Investors Trust Inc., is a non-traded real estate investment trust that acquires and owns hotels in the United States. The company primarily operates its hotels under a franchise or license agreement with various brands. The REIT was formerly known as ARC Hospitality Trust Inc., a publicly registered non-traded real estate investment trust.
Bad News for Investors
According to reports, The REIT’s redemption program has been terminated and the company no longer pays a dividend. The company must get approval from Class C units before doing future redemptions, and according to SEC filings it “no longer pays distributions.” The NAV has decreased by 47% since initial issuance to just $13.20, down from the $25 initial purchase price.
Non-traded REITs like Hospitality Investors Trust Inc. often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer. If they are able to find one can suffer significant losses on the sale. On Monday, MacKenzie Realty Capital, Inc. extended a tender off for Hospitality Investors Trust Inc. of $5.53 per Share. This appears to be a significant loss for investors.
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendations. Investors who purchase high-risk non-traded REIT investments, like Hospitality Investors Trust Inc., may not be aware of the problems and risks involved.
Risks of Non-traded REITs
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.
Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling REITs – as high as 15%.
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. Unfortunately, the high sales commissions may provide some brokers with enough incentive to make unsuitable investment recommendations.
Broker dealers are required to perform adequate due diligence on any investment they recommend. They must 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.
If you suffered losses investing in Hospitality Investors Trust, Inc. and would like a free consultation with a securities attorney, please call The White Law Group 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 Vero Beach, Florida.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.