Four Springs Capital 1031 Exchange DSTs, Securities Investigation
Are you concerned about your investment in a Four Springs Capital 1031 DST? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.
Four Springs Capital is reportedly focused on arranging for tax deferred Section 1031 exchanges of retail, industrial/warehouse, medical office and other commercial properties, according to its website. The Sponsor is a wholly owned subsidiary of the Four Springs Capital Trust, a real estate investment trust (REIT) that is focused on acquiring and managing a diversified portfolio of single tenant net leased properties that are leased to investment grade and other creditworthy tenants.
According to filings with the SEC, the company reportedly sponsored the following DST offerings:
FSC AS Mt. Juliet TN DST
FSC MRC Odessa TX, DST
FSC GM Lebanon IN, DST
FSC AS Jonesboro AR DST
FSC BJ Tilton NH, DST
Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, allegedly offering the potential for monthly income and diversification without any on-going landlord duties.
Risk Factors related to a 1031 Exchange
Property Value Loss – All real estate investments have the potential to lose value over time.
Tax Status Changes – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities.
Possibility of Foreclosure – All financed real estate investments have potential for foreclosure.
Illiquid Investments – 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions.
Fees/Expenses – Investors’ returns may be affected by the costs associated with the transaction. and may outweigh the tax benefits.
Investigating Potential Lawsuits
The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended 1031 exchange investments to clients.
Despite the risks of investing in DSTs, The White Law Group has seen a number of instances where brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.
Fortunately, FINRA does provide for an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim.
If you are concerned about your investment in a Four Springs Capital 1031 exchange DST, please call the securities attorneys at 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.
For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.