Unsuitable Investment Recommendation May Be a Factor in Brokerage Firm Customers’ Losses
Investors in RW Holdings NNN REIT, Inc., a non-traded real estate investment trust formerly called the Rich Uncles NNN REIT, have suffered significant losses this year.
Not only did RW Holdings NNN REIT announce in May 2020 that it was suspending its offering and plans to revise its net asset value (NAV)/share, but also, any NAV and distribution rate would likely be lower in the wake of the impact that COVID-19 is having on the markets. The company pointed to its inability to collect 100% of all contractual rents because of the pandemic as a reason for re-evaluating its distribution rate.
At Shepherd Smith Edwards and Kantas (SSEK Law Firm), our real estate investment fraud attorneys are speaking to investors whose broker or investment advisor recommended and sold the RW Holdings NNN REIT to them.
Unfortunately, the payment of healthy commissions to those registered representatives that sold these investments may have been an incentive for promoting them even when it was not the right choice for a customer. Contact our securities fraud law firm today.
Illiquidity, High Redemption Fees Are Usually Not a Good Fit For Retail or Conservative Investors
RW Holdings NNN REIT is a non-listed, publicly registered REIT. It invests mostly in real estate owning entities and single-tenant income-producing properties that are rented out to qualified tenants under long-term net leases.
Sources online note that this non-traded REIT’s portfolio includes 2.4 million square feet and over 40 properties, including real estate properties, industrial properties, office properties in 14 US states, as well as a 72.2% tenant-in-common interest in one Northern California office property.
Originally sold at $10/share, just a few months ago RW Holdings NNN REIT already was stating a lower estimated $6/share NAV price. Secondary markets were reportedly expected to give this investment an even lower value.
Although the RW Holdings NNN REIT is available to non-accredited investors, requiring low investment minimums, it is important to remember that non-traded REITs are generally not suitable for investors that can’t handle a lot of risks.
These investments are usually illiquid, costly, and charge high redemption fees. Many states have even prohibited investors from investing over 10% of their liquid assets in them. Meanwhile, brokers who sell these types of REITs to customers are typically paid high commissions.
Considering that brokers are supposed to act in a customer’s best interests, making recommendations that are only suitable for the client’s portfolio and investing goals, the RW Holdings NNN REIT should only have been sold to investors for whom they were a proper fit.
Real Estate Investment Fraud Lawyers
For three decades, SSEK Law Firm has been helping investors who lost money in non-traded REITs to recover the damages and losses they sustained.
We are experienced and knowledgeable investment fraud lawyers representing retail investors, retirees, institutional investors, and high-net-worth individual investors nationwide.