Non-traded REITs have long been a popular source of income, but choosing the right one comes with risks. One such REIT, NorthStar Healthcare Income REIT, has recently faced complaints and investigations, leading to significant losses for investors. Our law firm is currently representing investors who have filed claims against NorthStar Healthcare Income REIT to recover their losses.
The value of NorthStar Healthcare Income REIT has dropped by over 30%, and shareholders have had their payments suspended, resulting in substantial losses. Many investors have taken legal action against financial advisors and brokerage firms through class actions and FINRA arbitration.
If you or someone you know has invested in NorthStar Healthcare Income REIT, please contact our attorneys at 1-800-856-3352 for a free consultation and to explore your options for recovering your losses.
Complaints against NorthStar Healthcare Income REIT are being reviewed and processed, but it takes time. In the meantime, several law firms are investigating the allegations against NorthStar Healthcare Income and other non-traded REITs. It is important to understand why these investments are under scrutiny.
Numerous broker-dealer firms and financial advisors recommended substantial investments in NorthStar Healthcare Income Inc., often without fully disclosing the risks involved. Our team at Haselkorn & Thibaut, P.A. is investigating NorthStar Healthcare non-traded REIT and the significant losses suffered by investors. We believe that investors may have been misled and are entitled to compensation.
NorthStar Healthcare REIT
Why did Northstar Healthcare Suspend Dividends
Last year, NorthStar Healthcare announced that it would be discontinuing dividend distributions. This decision creates confusion for public investors who may find it challenging to determine whether the distributions they received were a return on their investment or a partial return. Financial advisors and broker-dealer firms often fail to fully disclose important details about the nature of the distributions, leading to misunderstandings and potential harm for investors.
The sales practices related to non-traded REITs like NorthStar Healthcare often lack proper supervision and fail to provide accurate explanations and disclosures. These investments offer high commissions to brokers and advisors, which can incentivize them to downplay the risks and mislead investors.
NorthStar Healthcare initially focused on investing in healthcare real estate, specifically in the senior housing sector. However, their investment strategy has proven to be unprofitable, resulting in a decrease in the value of their units.
Definition of Non-Traded REITs
A non-traded REIT is a type of real estate investment that does not trade on public exchanges. NorthStar Healthcare is a non-traded REIT that invests in various properties, such as multifamily properties, hotels, warehouses, medical office buildings, and shopping centers. Investors in non-traded REITs typically benefit from profit over time based on the success of the company and receive returns on investment through rental income.
Non-Traded REITs Pros and Cons
Non-traded REITs offer potential tax benefits and allow investors to diversify their portfolios with real estate investments. However, they can be illiquid for extended periods, making it difficult for investors to access their funds. While there are risks involved, non-traded REITs still provide benefits such as tax advantages and access to real estate investments that are otherwise inaccessible.
Northstar Healthcare Income REIT
Northstar Healthcare Income REIT Description
Northstar Healthcare Income Inc. focuses on acquiring, building, and managing a diverse portfolio of healthcare-related real estate investments. Their primary focus is on senior housing, including nursing homes, old-age communities, rehab clinics, hospitals, and other healthcare-related properties in the Midwest United States. Backed by Colony Capital, NorthStar Healthcare Income raised billions of dollars to purchase properties within their target categories.
Northstar Healthcare REIT Investments
Investing in Northstar Healthcare Income REIT had specific requirements and limitations imposed by various states. Financial and investment advisors highly recommended Northstar Healthcare, making promises of high returns and safe, fixed income. Unfortunately, these promises had no basis, and many investors were unaware of the risks associated with these investments.
The commissions offered to advisors and brokers for selling Northstar Healthcare REITs were substantial, which may have influenced their recommendations. As a result, the majority of investors' capital was diverted to brokers and advisors, leaving shareholders with minimal returns on their investments.
Northstar Value Decreases
In late 2018, Northstar Healthcare announced a significant decrease in the value of its units, shocking many shareholders who were not previously informed. The company attributed the decline to various factors, including increased costs, cash flow issues, and occupancy problems. Despite claims of owning a substantial portfolio, evidence suggests that Northstar Healthcare's investment strategy was never profitable.
Investors Recovering Losses
Since 2015, Northstar Healthcare has attempted to repay investors, but payments only returned their invested money without profits. Shareholders were not aware that they were not making money over time. The company recorded accumulated losses of around $1 billion, which prompted them to suspend dividend distributions to preserve capital. This decision left investors in a precarious situation, as non-traded REIT companies have the discretion to modify payments and dividends.
Liquidating or Selling Northstar Healthcare Income REITs
Investors found themselves with little to no distributions and stuck with illiquid investments. The only option was to find a third-party buyer on the secondary market and sell their REITs at significantly reduced prices. Bids for Northstar Healthcare Income REIT were as low as $1.50 or even lower, resulting in substantial losses for shareholders.
Non-Traded REIT Lawsuit and Claims
While investing in non-traded REITs comes with inherent risks, legal claims can be pursued under certain circumstances. Investors may be able to participate in class actions or file arbitration claims against the REIT or the professionals who recommended the investment. Financial advisors and broker firms have a responsibility to provide full transparency and accurate information about the risks associated with investments.
Investors in Northstar Healthcare Income REIT may have grounds for legal action. Broker-dealer firms and investment advisors likely misled investors by misrepresenting the risks and failing to disclose crucial information. Holding these professionals accountable for their actions is crucial, and reputable law firms are ready to assist investors in seeking compensation.
Who Is To Blame for Northstar Healthcare Non-Traded REIT Losses?
While there is debate surrounding Northstar Healthcare's transparency, the primary focus of legal action is on the broker-dealer firms and financial advisors who recommended these investments. Non-traded REITs are inherently risky, and companies have the right to make changes to distributions and dividends. Northstar Healthcare cannot solely be held responsible for the losses.
There is hope for investors who have suffered losses. By contacting experienced lawyers and firms that specialize in non-traded REIT cases, investors may be able to pursue legal action and hold responsible parties accountable.
Losing money is never easy, especially for those who rely on steady income from non-traded REIT dividends. However, reputable law firms are dedicated to helping investors recover their losses. If you have invested in Northstar Healthcare Income Non-Traded REIT and believe you have been misled, it is essential to reach out to knowledgeable legal professionals who can guide you through the process of seeking compensation.
