{"id":1770,"date":"2016-01-05T20:07:44","date_gmt":"2016-01-05T20:07:44","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2016\/01\/shareholder_files_against_reit"},"modified":"2022-03-11T13:38:12","modified_gmt":"2022-03-11T19:38:12","slug":"shareholder-files-against-reit","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/shareholder-files-against-reit\/","title":{"rendered":"Shareholder Files Against REIT Over $41M Puerto Rico Hotel Loan Write-Down"},"content":{"rendered":"

\t\t\t\tA shareholder of Resource Capital Corp. is suing the real estate investment trust (REIT)<\/a> because of the way it dealt with a Puerto Rico hotel loan portfolio and a $41 million write-down that resulted last year. Plaintiff Josh Reaves says that the REIT’s directors knew there was bleak information about the deteriorating financial state of the U.S. territory way before a press release went out in August revealing there had been a $41 million write-down on a hotel mezzanine loan. The announcement caused the REIT’s stock to drop over 12% ,while erasing $55 million in market capitalization. <\/p>\n

Reaves says that Resource Capital should have known as early as February 2014, when Puerto Rico debt was downgraded to “junk” status, that investments on the island were at risk. Instead, he contends, the REIT did not disclose the degree to which its loan portfolio was exposed to the Puerto Rican economy, misrepresented the degree of risk the portfolio could handle, did not abide by disclosure practices as they pertain to loan impairment, did not accurately represent the portfolio’s value, and failed to have the internal controls needed to stop the risks from becoming too precarious. <\/p>\n

In August 2015, when submitting its filing to the SEC, Resource Capital wrote that the loan’s outstanding balance was $38.1 million and moved $3 million of accrued interest to the negative column from the positive column. Because of the $41 million write-down, $31 million was lost over that quarter. <\/p>\n

Reaves’ case is a derivatives lawsuit. He is filing it on the company’s behalf. This means that Resource is a nominal defendant. The defendants named included the REIT’s CFO David Bryant, CEO Jonathan Cohen, Chairperson Steven Kessler, and a number of its board members.
\n Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A shareholder of Resource Capital Corp. is suing the real estate investment trust (REIT) because of the way it dealt with a Puerto Rico hotel loan portfolio and a $41 million write-down that resulted last year. Plaintiff Josh Reaves says that the REIT’s directors knew there was bleak information about the deteriorating financial state of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3922,4039,3759],"tags":[],"class_list":["post-1770","post","type-post","status-publish","format-standard","hentry","category-municipal-bonds","category-puerto-rico-bond-funds","category-reits"],"yoast_head":"\nShareholder Files Against REIT Over $41M Puerto Rico Hotel Loan Write-Down — Investor Lawyers Blog — January 5, 2016<\/title>\n<meta name=\"description\" content=\"A shareholder of Resource Capital Corp. is suing the real estate investment trust (REIT) because of the way it dealt with a Puerto Rico hotel loan — January 5, 2016\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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