If you are an investor in NorthStar Healthcare Income, you very likely received a letter last month notifying you that monthly distributions from this investment have been suspended. According to NorthStar’s board, the publicly registered nontraded real estate investment trust’s (nontraded REIT) portfolio has been undergoing “operational and performance challenges” that as of the end of June 2017 has resulted in a “lower estimated value/share” of the NorthStar Healthcare’s common stock. The nontraded REIT has since determined that in order to protect both capital and its financial state, suspension of these distribution payments is necessary.
The NorthStar Healthcare Inc. nontraded REIT was set up to originate, acquire, and oversee healthcare industry-related investments, including debt, equity, and securities investments involving healthcare real estate. Sources note that between 2013 and 2018, it raised about $2B and set up a portfolio involving more than 650 properties.
However, NorthStar Healthcare Income began reducing distribution rates in December 2017. By October of last year, it had notified investors that it would only buy back shares from an investor if qualifying disability or death were factors. In December 2018, the nontraded REIT reduced its net asset value from $8.50/share to $7.10/share. Now, with the distribution suspension, some investors are standing to lose not just their monthly distributions, but also they could see a substantial decline in value on their principal that they originally invested.
NorthStar Healthcare Income Investor Fraud Claims
If you are a NorthStar Healthcare Income investor who has sustained significant losses in this investment, please contact our nontraded REIT fraud lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today. You may have grounds for an investor fraud claim against the nontraded REIT and the broker/the brokerage firm that recommended you invest in NorthStar Healthcare, especially if the financial representative and/or the broker-dealer:
- Recommended certain positions that caused your own portfolio to become concentrated or over-concentrated in NorthStar Healthcare Inc. REIT.
- Failed to disclose the risks involved—and make no mistake—the NorthStar Healthcare nontraded REIT is a high-risk investment that can be very volatile, which means that it is not suitable for every investor.
Unsuitable Recommendations and Breach of Fiduciary Duty
It is a broker’s duty to apprise clients of the risks involved in any investment. It is also a broker’s duty to make sure that any investment they recommend is suitable for the investor based on investment goals, age, investing experience, and the degree of risk he/she can handle. Failure to do any of this can be grounds for a breach of fiduciary obligation claim or a broker fraud case.
Contact SSEK Law Firm for a free, no obligation consultation.