The tragedy of Northstar Healthcare REIT is that it is all typical in the non-traded REIT world.
- Written by Christopher T. Vernon
- Researched by Vernon Litigation Group
I first represented investors against a brokerage firm for the sale of Non-Traded REITS over two decades ago and have been representing investors on Non-Traded REIT cases against many brokerage firms since that time. We have also written numerous articles over the last decade detailing problems with Non-Traded REITS. Here are some of the commonalities you will find in most Non-Traded REITS such as Northstar:
Most investors are retail investors looking for a steady income and hoping to avoid the volatility and risks of the stock market.
Most investors are not even aware of non-traded REITs until these products are recommended by their investment professional, who they believe is providing them with unbiased, independent investment advice.
Most investment professionals and the brokerage firms they work for receive extremely high commissions for selling non-traded REITS such as Northstar.
Sold primarily by what is known as second-tier brokerage firms who are willing to peddle these troubled products to their clients because of the high commissions.
Despite the fact that non-traded REITs are not sold by most of the largest brokerage firms in the world and even though institutional investors avoid these products, billions are sold each year (In that number about $3 billion of Northstar was sold to the public).
That the perceived safety of these products includes the fallacy that they are safer because their price doesn’t seem to fluctuate daily. However, this is one of the many downsides of non-traded REITs. One of the reasons you see little fluctuation is because there is no liquid market to buy and sell them. This means these are extremely illiquid products and a lack of liquidity is a significant risk rather than a benefit in the investment world.
That non-traded REITs such as Northstar, due in part to their lack of liquidity, can begin to have significant problems long before investors can reasonably discover those problems or the full extent of those problems. Hence the a significant disparity between Northstar’s valuation and valuations on the limited secondary market for buying and selling Northstar. With respect to Northstar investors specifically, you should be aware that your claims may be limited or even lost if you delay too long in bringing a claim. The initial offering of Northstar was back in 2013 and even follow on the offer was almost four years ago. Under the law and FINRA arbitration Rules, there are time limits for bringing certain claims and we don’t want to see investors lose the right to bring valid claims relating to Northstar due to the passage of time.
Vernon Litigation Group
Vernon Litigation Group’s investigations and advocacy on behalf of investors related to non-traded REITs have been featured in national publications and the lawyers at Vernon Litigation Group have recovered tens of millions of dollars for non-traded REIT investors over the years. For additional articles and information regarding the many troubling aspects of non-traded REITs visit the blog section of Vernon Litigation Group.
Vernon Litigation Group represents investors in courtroom litigation, arbitration, and negotiations throughout the United States. Out lawyers represent investors in federal court, state court, mediation, and arbitration )including FINRA, JAMS, and AAA arbitration). To speak with an attorney regarding your investment in Northstar Healthcare or other troubled non-traded REIT investments, contact Vernon Litigation Group or call us at (239) 319-4434.