Recovery of Investment Losses in Lightstone Value Plus REIT V
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments, like Lightstone Value Plus REIT V. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
Lightstone Value Plus REIT V is a publicly registered non-traded REIT, formerly known as Behringer Harvard Opportunity REIT II. The REIT has recently estimated that the net asset value was $9.10 per Share for the company’s common stock, as of September 30, 2019.
On June 12, 2020, MacKenzie Capital Management, LP extended a third party tender offer to investors of Lightstone V to purchase shares for just $1.50 per share. The original offering price was $10.00/share.
According to MacKenzie’s letter to investors, the REIT’s liquidity event has been delayed. In January, Lightstone reportedly extended the target date for a liquidity event to June 30, 2028. Further, in connection with its December 2019 self-tender offer, “Lightstone suspended its share repurchase program and has given no indication as to when it may reopen,” according to the letter to investors. Lightstone reportedly hasn’t paid a cash distribution since January 2016.
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. Often they are 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, sometimes, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.
Non-traded REITs like Lightstone Value Plus REIT V often 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. 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 Lightstone Value Plus REIT V 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 Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.