Recovery of Investment Losses involving Moody National REIT II
The White Law Group continues to investigate potential securities claims involving Moody National REIT II and the liability FINRA registered advisors may have for recommending it to investors.
Moody National REIT II is a non-traded real estate investment trust (REIT) with a portfolio of 15 hotels. On September 8, 2021, the company made a statement regarding the continued impact of the COVID-19 pandemic on the Company’s properties and operations. The REIT blames possible future impact on the new Delta variant, saying it is concerning to our industry and may impact corporate travel this fall. The company notes it won’t be able to reinstate distributions or redemptions until it can pay back senior lenders for loan modification agreements.
On August 5, 2021 the company reportedly announced it would postpone valuation to a later date due to “extreme volatility and lack of liquidity in the hospitality market.”
After the REIT suspended its offering, distributions, and share repurchase program last April in the midst of Covid-19, Mackenzie Realty Capital extended a tender offer to purchase shares of the REIT for just $5.00 per share. This could signify big losses for investors as the original purchase price was $25.00 per share.
According to Mackenzie’s offer letter, Moody plans to complete a liquidity event within three to six years from the termination of its IPO. Although the IPO was recently suspended due to the impact of COVID-19, the board may choose to reinstate it in the future; potentially lengthening the timeframe for stockholder liquidity.
Potential Lawsuits to Recover Financial Losses
Liquidity is often 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.
The White Law Group continues to investigate the liability that brokerage firms may have for unsuitably recommending high risk non-traded REITs to investors.
Moody National REIT II and other non-traded REITs are complex, high-risk investments. They are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.
Non-traded REITs are also known for high sales commissions and due diligence fees. Brokers have an enormous incentive to push these products to unsuspecting investors who do not fully understand the risks. Sometimes brokers misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment, they may be found liable for investment losses in a FINRA arbitration claim.
If you are concerned about your investment in Moody National REIT II or another non-traded REIT, please contact The White Law Group at 1-888-637-5510 for a free consultation.
For more information on its investigation, please see Moody National REIT II, Investors may have Claims.
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. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.