Lightstone Value Plus REIT V Redemption Limited to “Stockholder’s Death”
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. As of September 30, 2020, the estimated NAV per Share was $9.42 per share and shares were originally sold for $10 per share.
According to filings with the SEC, on December 13, 2019, the Company’s board of directors approPved the suspension of the SRP, meaning the Company would not accept any requests for redemption.
Unfortunately for investors, while the company did reopen the SRP effective March 25, 2021, it is “solely for redemptions submitted in connection with a stockholder’s death.” The price for all redemptions is reportedly $9.42, which is 100% of the NAV per Share as of September 30, 2020.
According to the company, “deaths that occurred subsequent to January 1, 2020 are eligible for consideration.” Beginning January 1, 2022, requests for redemptions in connection with a stockholder’s death must be submitted and received by the Company within one year of the stockholder’s date of death for consideration.
Shares of Lighthouse Value Plus REIT V were recently listed for sale on Central Trade & Transfer, a secondary market for alternative investments for just $5.25 per share, indicating losses for investors.
Lack of Liquidity can be a Problem for Non-traded REIT Investors
Liquidity can be a problem for investors in non-traded REITs. 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.
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, in many cases, 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.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.