Investigating Potential Claims  – Power 5 Conference Student Housing I DST

Are you concerned about your investment in Power 5 Conference Student Housing I 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.  

Strategic 1031 Properties, LLC, a sponsor of 1031 exchanges structured through Delaware Statutory Trusts (DSTs), reportedly filed a form D in 2018 to raise capital from investors for the offering, Power 5 Conference Student Housing I DST, according to a filing with the SEC. The total offering amount sold to investors was purportedly $37,916,999.  

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. 

Risks of Investing in Student Housing

Investing in student housing carries considerable risk due to its heavy reliance on a single demand driver: the local college or university. Recent events, such as the COVID-19 pandemic, have starkly illustrated the vulnerability of student housing, with universities shutting down and causing significant spikes in vacancy rates.

This led to decreased or halted cash flow distributions for investors, impacting their 1031 exchange investments. Many students returned home, reducing the demand for student housing and creating financial challenges for DST student housing projects. It’s essential for investors to proceed cautiously and recognize the genuine risks associated with investing in student housing, as evidenced by numerous foreclosure tales within this sector.

There are also risks involved with investing in 1031 DSTs. Including the following:

1031 Exchange Risk Factors 

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.  

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.  

Fees/Expenses – Investors’ returns may be affected by the costs associated with the transaction. and may outweigh the tax benefits.  

Property Value Loss – All real estate investments have the potential to lose value over time.  

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. 

Potential Lawsuits to Recover Financial Losses  

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk investments to investors.  

Despite the risks of investing in 1031 DSTs, 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 Power 5 Conference Student Housing I 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 and Seattle, Washington.