NorthStar Healthcare Income Inc. – Bad News for Investors
Have you suffered investment losses in NorthStar Healthcare Income Inc. REIT? If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.
The White Law Group continues to investigate potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments, like NorthStar Healthcare Income, Inc. The firm has represented numerous investors in claims against their brokerage firms to recover non-traded REIT investment losses.
NorthStar Healthcare, a public, non-traded real estate investment trust (REIT) invests in healthcare real estate, with a focus on the independent living facilities, assisted living, memory care and skilled nursing facilities, according to its website.
NorthStar Healthcare reduced its distribution rate to 3.31% from 6.67% in December 2017 and The REIT’s Net Asset Value has continued to decline from $8.50 per share to $7.10 per share, then to $6.25 per share in December 2019. In April 2020, the board suspended all repurchases under the share repurchase program in order to preserve capital and liquidity. Distributions were suspended in February 2019.
The current NAV is estimated at $3.89 per share, as of June 20, 2020, according to filings with the SEC.
The estimated value of the REIT’s joint venture investments was $389.3 million, compared with a total equity contribution of $511.1 million. The estimated value of the REIT’s healthcare borrowings was $1.4 billion, compared with a gross outstanding principal amount of $1.48 billion.
In total, the estimated value of NorthStar Healthcare’s healthcare properties, joint venture investments and healthcare debt investment was approximately $2.06 billion, an approximate 25 percent decrease in value compared to the total cost.
Secondary Sales Price Continues to Decline
Unfortunately for investors, Central Trade & Transfer, a secondary market for non-traded REITs, has recently sold shares of NorthStar Healthcare for just $1.25 per share. This may indicate a significant loss to investors, as the original offering price was $10.00 per share.
Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.
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 and often 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 client’s 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.
In addition to the high risks, non-traded REITs, like NorthStar Healthcare Income 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 and to 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 NorthStar Healthcare Income and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.
For more information on the firm’s investigation please see:
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.