NorthStar Healthcare Income REIT
NorthStar Healthcare Income Real Estate Investment Trust (REIT) was set up to originate, acquire, and asset manage debt and equity investments in healthcare real estate. It specializes in senior housing, including nursing homes, assisted living facilities, and senior communities. It invests in rehab clinics, hospitals, and other health-related entities, mainly in the US Midwest.
As a public, non-traded REIT, NorthStar Healthcare Income raised approximately $1.8B from its initial public offering in 2015 and a follow-on offering in 2016. In early 2019, the REIT's board stopped paying dividends after analyzing its financial health, business, capital requirements, and liquidity resources.
NorthStar Healthcare Income REIT investors are now alleging they were never apprised that the distributions they received were not an accurate reflection of returns on investments made by the entity's business operations. They also claim that they did not know that the payments they got were, in part, a return of principal and may have come from a large loan.
Unfortunately, investors of NorthStar Healthcare Income likely have not received an actual return on their investments in years.
Our private non-traded REIT investment lawyers (SSEK Law Firm at investorlawyers.com) represent NorthStar Healthcare Income REIT investors in Financial Industry Regulatory Authority (FINRA) arbitration against the brokerage firms that sold them these investments. If you would like to explore your legal options related to this matter, contact us at SSEK Law Firm today.NorthStar Healthcare Income REIT Has a History of Trouble
Even before the board stopped distributions of NorthStar Healthcare Income REITs, there were already signs of trouble:
- 2018: NorthStar Healthcare Income's upper management announced that the value of its units had declined by more than 30% from its initial price of $10.20/share. The REIT's Board notified investors that their shares' net asset value (NAV) had gone down to $7.10/share.
- 2019: NorthStar Healthcare Income REIT's price had declined to $6.25/share.
- 2021: Bids to buy this REIT on the secondary market were at $1.50 or lower/share.
No distributions, no liquidity, and the only hope is possibly finding a third-party buyer willing to pay pennies on the dollar? Your financial advisor that sold this illiquid product to you is likely the one to blame.
He or she may have misrepresented NorthStar Healthcare as safe, or at the very least moderately safe. Additionally, the broker may have unsuitably recommended this investment. Or overconcentrated your account with this non-traded REIT. Your broker might have referenced a holding or lock-up period akin to an annuity or CD.
However, those are liquid products that usually charge minor penalties. This is not the case with investments like NorthStar Healthcare Income REIT. Even worse, your financial advisor may have made many other private real estate investment trust recommendations for your portfolio. Inevitably, this would result in making your portfolio toxic and frozen.Brokers Made Misrepresentations About The Risks
Certain kinds of real estate investment trusts can be suitable in small quantities for some investor portfolios seeking real estate exposure. Sadly, many investment professionals recommend these privately traded REITs as safe fixed-income alternatives. They are not. These products are unproven and usually not big enough to go public. In short, REITs such as NorthStar Healthcare Income can make hazardous investments.
Because NorthStar Healthcare Income REIT had good distributions, many financial advisors allegedly misrepresented this product as similar to a bond fund. It is not. Many investors trusted their broker, who likely had them sign voluminous disclosure documents created by NorthStar that were hard to understand because of the legal jargon.High Commissions Involving Private, Non-Traded REIT Allegedly Appealed to Brokers
Yet NorthStar Healthcare became a popular recommendation among many financial advisors, primarily due to the hefty commissions. It is believed that this REIT paid brokers and their firms substantially, including 7% in selling commissions upfront and an additional 6% in other fees and costs.
This means that only around 86.5% or less of investors' capital went toward any investments. Financial firms and their registered representatives pocketed the rest.Skilled NorthStar Healthcare Income REIT Law Firm
Our securities lawyers at Shepherd Smith Edwards and Kantas represent low to high net worth individual investors, businesses, retirees, and retirement accounts throughout the US. We have filed numerous cases against various financial firms over private REITs. We have recovered millions of dollars on behalf of our clients.
The problem with NorthStar Healthcare Income REIT was that it was only suitable for aggressive investors with no liquidity needs, and even then, only in small quantities. If you suffered investment losses in this non-traded REIT, contact one of our seasoned professionals for a free consultation.
Call SSEK Law Firm at (800) 259-9010.