Massive Losses for NorthStar Healthcare REIT Prompt Immediate Action

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INVESTOR ALERT: Massive Losses for NorthStar Healthcare REIT Prompt Immediate Action

Vernon Litigation Group has issued an investor alert for investors of NorthStar Healthcare REIT following several developing stories concerning the value of the company.

NorthStar REIT Problems

NorthStar Healthcare REIT is a public, non-traded real estate investment trust (REIT) that went public in 2015 after raising nearly $2 billion in funds. NorthStar is sponsored by DigitalBridge, which is formerly known as Colony Capital, Inc.

According to recent news, NorthStar investors have received tender notices finding that their investments are worth far less than previously reported. In June 2019, the net asset value (NAV) was $6.25 per share, but one year later in June 2020, the NAV was cut nearly in half to $3.89 per share. The original selling price when the REIT went public was $10 per share, representing a 60% decline in the NAV within six years.

The true value of these shares may be even lower, since non-traded assets would normally trade below NAV had they been a publicly-traded asset. Altogether, this major decline in NorthStar’s value has prompted investors to take action.

Issues with Non-Traded REITs

Non-traded REITs are problematic for the average investor. These investments are commonly known as alternative investments, meaning they are beyond the scope of typical stocks and bonds that are liquid and publicly-traded.

Liquidity refers to the availability of a market for a given stock or bond. Liquid investments are preferable to illiquid investments because investors have greater flexibility in disposing of their investment when there is an available market for it. Illiquid investments are generally geared towards sophisticated investors that have more experience and knowledge in a given alternative investment. Thus, the average investor should proceed with extreme caution before investing in alternative investments.

High Commissions

Although non-traded REITs are not for the average investor, many investment brokers and financial advisors continue to pitch them to clients that have little to no experience investing in such asset classes. Many brokers and advisors sell these alternative investments to clients so that they could earn high commissions for selling the products.

This is problematic because there is an inherent conflict of interest when investment professionals sell products to earn commissions that are inappropriate for their clients. Simply put, they are not acting in the best interests of their clients by selling such products.

Recover Your Losses

If you have suffered losses in NorthStar Healthcare REIT, please contact us to speak with an experienced financial attorney. Vernon Litigation Group offers confidential, no-cost consultations to discuss your rights and potential recovery methods.

Vernon Litigation Group offers our legal counsel and representation to clients across the United States. Contact us now.

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