Bad News for Investors in Strategic Student & Senior Housing Trust Inc.
The White Law Group continues to investigate potential securities claims involving the liability that brokerage firms may have for recommending Strategic Student & Senior Housing Trust Inc. to investors.
Strategic Student and Senior Housing Trust, Inc. is a public, non-traded REIT focused exclusively on student housing and senior housing, according to its website.
Letter to Strategic Student & Senior Housing Trust Inc. Shareholders
According to the DI Wire, publicly registered non-traded real estate investment trust, Strategic Student & Senior Housing Trust Inc. sent a letter to shareholders on August 31, 2021 with a number of “concerns,” including liquidity, COVID-19, and loan-to value ratio, among others.
Since closing its public offering in March 2020, the company said that it has not raised any new equity in over a year, according to the letter to shareholders.
The REIT blames the Delta variant outbreak for a portion of its troubles, stating that governmental directives have on several occasions shut down access to and limited our ability to lease units at our seniors’ properties… As a result, occupancy levels could decline until the surge is over.”
The company also noted that it is highly leveraged with a loan-to-value ratio of 81 percent, including $44 million of bridge loans, which mature in April 2022 and currently doesn’t have the cash flow to pay off these loans. The company’s lender-mandated restricted cash reserves are reportedly required to increase by $1.8 million on January 1, 2022, and it does not have the cash on hand to meet this obligation, according to the letter.
The REIT says it is considering several options “to address our liquidity concerns and debt maturities…including but not limited to asset sales, a joint-venture recapitalization, and bridge loan extensions.”
Net operating income from the student housing properties totaled nearly $1.1 million in the second quarter of 2021, compared to $823,700 for the same period in 2020.
The REIT said that while it was encouraged by the 330-bps increase in its seniors occupancies, it incurred “significant expenses related to concessions, sales incentives and higher payroll due to labor shortages.”
In March 2021, Strategic Student & Senior Housing Trust suspended its primary public offering and share redemption program (SRP), as well as distributions to shareholders, citing the coronavirus (COVID-19) global pandemic.
Recovery of Investment Losses
The trouble with non-traded REITs is that they are complex and inherently risky products. Lack of liquidity is often problematic for many investors. Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale. According to Central Trade & Transfer, a secondary market for alternative investments, shares of the REIT are currently listed to sell for just $4.00 per share. This could indicate losses for investors as the original offering price was $10.00 per share.
Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses.
If you have suffered losses investing in Strategic Student & Senior Housing Trust Inc., please contact The White Law Group at 888-637-5510 for a free consultation.
For more information on the firm’s investigations please see:
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 Seattle, Washington. For more information on the firm, visit www.WhiteSecuritiesLaw.com.