Unfortunately, Property Management Firm May Not Be Able to Come Up with All the Funds
According to attorneys for Greg Milligan, the plan administrator for liquidation proceedings involving luxury high-rise student building Skyloft Austin, a court has approved on a final basis the liquidation plan that would require Nelson Partners Student Housing to pay its investors a claim of $50M. Under the Stipulation and Plan of Liquidation, the real estate management firm will likely have to sell most of its twenty students housing real estate properties to obtain this money.
The website of this property management company shares that Nelson Partners own off-campus student housing properties in multiple US States, including various buildings close to the following universities:
- Utah State University
- Dixie State University
- Washington State University
- Colorado University
- University of Oregon
- Purdue University
- Western Washington University
- Arizona State University
- West Virginia University
- Montana State University
- The University of Northern Colorado
- Utah Valley University
Following the liquidation proceedings, Skyloft Austin has eighteen months to raise funds. A sum of $50 million will be placed in a trust and distributed to investors pro-rata.
While this liquidation deal held Nelson Partners accountable to investors, they would only be able to raise half of the money. Not only that but the property management firm has been having financial problems for some time now. The CEO Patrick Nelson has also been accused of running a Ponzi-like scam.
This is why it is important that you consider filing your own Financial Industry Regulatory Authority (FINRA) arbitration claim against the broker-dealer that marketed and sold you this private placement real estate deal.
Who Are Skyloft Austin Investors?
The liquidation plan was proposed following a lawsuit by Skyloft Austin investors in which they alleged breach of fiduciary duty, investment fraud, and misrepresentations. Some other claims include the purported diversion of funds for other purposes unrelated to the real estate private placement deal. These investors, many of them retail customers and retirees, each invested between $100K to $500K in this renowned eighteen-story off-campus apartment development near the University of Texas in Austin.
Many investors were looking to earn regular dividends and receive deferred capital gains tax benefits in a 1031 exchange deal. The deal was valid till the sale proceeds were invested in another property of the same or higher value.
Allegedly, Skyloft Austin investors stopped receiving the regular payments they were owed and may have lost up to $75M. Moreover, the Hedge Fund Axonic Capital, which lent millions of dollars to finance Skyloft Austin, has since taken the building and sold it to someone else. (In a separate lawsuit against Axonic, a jury ordered the hedge fund to pay $17.5M to investors, but the defendant is appealing the verdict.)
Representing Skyloft Austin Investors Against Broker-Dealers Who Unsuitably Marketed Real Estate Private Placement Deal
It is important to note that Nelson Partners were helped by broker-dealers in marketing and selling Skyloft Austin to investors. Not only did the latter earn high commissions and fees from these sales, but it now appears that some of them may have allegedly failed to conduct the proper due diligence required or did not fully apprise customers of all the risks.
You should also know that this liquidation plan will not hold your broker accountable for unsuitably recommending Skyloft Austin to you and/or making misrepresentations and omissions in the process. Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) for more details on the liquidation plan.
Our professional real estate private placement attorneys have helped thousands of investors in Texas and around the US to recoup their investment losses caused by brokerage firm negligence or misconduct. If you are a Skyloft Austin investor and want to explore your legal options for pursuing a FINRA arbitration claim against your broker-dealer, contact SSEK Law Firm at (866) 901-3784.