Non-Traded REIT Seeks To Restructure $1.3B in Unsecured Debt
If you are an investor whose broker recommended that you invest in Hospitality Investors Trust (HIT), you may have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration claim to recover damages.
Hospitality Investors Trust used to be called American Realty Capital Hospitality Trust (ARC Hospitality Trust). In May 2021, the publicly registered non-traded real estate investment trust (non-traded REIT) filed for Chapter 11 Bankruptcy protection as it seeks to restructure its $1.3B in unsecured debt.
Our non-traded REIT fraud lawyers are representing investors in their FINRA arbitration claim over Hospitality Investors Trust losses. We pursue investor fraud cases against broker-dealers and their registered representatives to help our clients obtain their financial recovery. Contact our team at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) today.
HIT REIT Investors to See Stocks Cancelled
Hospitality Investors Trust acquired hotels. By the end of last year, it had 101 properties collectively valued at about $2B. However, its share price had been dropping over the last four years after investor distributions were suspended in 2017.
Initially sold at $25/share, by the end of 2019 HIT REIT stocks were going for $8.35/share. Central Trade & Transfer said that by the end of March 2021, the non-traded REIT’s shares were selling on that secondary market at $0.46/share
HIT REIT recently disclosed that it could not cover its financial obligations for the first half of 2021. The non-traded REIT’s biggest investor, Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC, agreed to provide it with a $65 million debtor-in-possession loan. Once the bankruptcy plan is in place, Brookfield will lend Hospitality Investors Trust a $25 million exit facility. The interest rate for these loans is 15% annually.
Meanwhile, HIT REIT investors will see their stocks canceled and traded for the right to contingent cash payments of no more than $6/common stock share.
Brokers May Have Unsuitably Recommended Hospitality Investors Trust
HIT REIT is a complex, high-risk, illiquid investment and should only be recommended to investors for whom they are a suitable fit in terms of their portfolio profiles and risk tolerance levels. It also would have been the responsibility of brokers and their firms to fully disclose the risks involved in Hospitality Investors Trust to customers.
Unsuitable investment recommendations and/or misrepresentations and omissions of the risks involved in any investment can be grounds for a FINRA arbitration claim to recover damages. Also, non-traded REITs are generally unsuitable for most retail investors, inexperienced investors, conservative investors, and retirees. Yet because these investments tend to charge high fees and commissions, they can be very attractive to financial advisors seeking to market products to their customers.
Experienced REIT Fraud Lawyers
SSEK Law Firm can help you explore your legal options to determine whether you have grounds for a FINRA arbitration claim. We have represented thousands of retail investors and sophisticated investors in recouping their losses.
Our seasoned non-traded REIT fraud attorneys have recovered many millions of dollars for our clients. SSEK Law Firm has offices across the US. Contact us today at (800) 259-9010 for your free no-obligation case assessment with a knowledgeable REIT fraud lawyer.