Investors in Summit Healthcare REIT (“Summit”), a non-traded real estate investment trust (Non-traded REIT), may have claims to recover their investment losses against their broker or financial advisor who recommended its purchase.
Summit, based in Lake Forest, California, invests in a diversified, income-producing portfolio of assets in the healthcare sector, focusing its investments on operators of senior housing facilities in the United States. Summit acquires, leases, and manages healthcare real estate and invests in the healthcare sector.
Public information indicates that shares of Summit have substantially fallen in value and are now worth less than $2 a share. MacKenzie Realty Capital has reportedly offered to purchase up to 330,000 shares of Summit for only $1.34 per share in a tender offer – which would leave investors who sold facing a significant loss on the original purchase price. Secondary market providers that permit investors to bid and sell illiquid products such as Non-Traded REITs value Summit shares at between $1.50 and $1.56, and the sponsor estimates their value at $2.53 a share.
For those investors now seeking to get out at current prices, doing so will likely lead to a painful loss.
Non-traded REITS are risky and not suitable for all investors. They are illiquid in nature (which may increase risk), and may have high costs of purchase. In many instances, non-traded REITs are marketed via a network of independent broker-dealers who make a nice commission (in some cases up to 10%) on sales to retail investors. Thus, brokers are financially incentivized to push Non-traded REITS over suitable alternatives. Beyond the commissions, Non-traded REITs typically charge additional expenses, such as due diligence and administrative fees (typically ranging between 1-3%).
Shockingly, Non-traded REITs have historically underperformed even safe investments, such as U.S. Treasury Bonds – suggesting that Non-traded REITs generally deliver lower returns relative to the higher risk investors needlessly assume. Notwithstanding, REITS are too often inappropriately pushed on retirees and the elderly seeking safety and income, often without full disclosure of all material risks. In such situations, the investment may be unsuitable and the brokerage firm who misleadingly sold it may be held legally responsible for losses.
If you purchased Summit Healthcare REIT upon the recommendation of your advisor and lost value, contact stockbroker fraud lawyer David Chase for a confidential, no-cost consultation about your ability to recover your investment losses at: (800) 760-0192 or at: david@davidchaselaw.com. Stockbroker fraud lawyer David Chase is the principal of the SEC law firm, David R. Chase, PA, based in Fort Lauderdale, Florida. Stockbroker fraud lawyer David Chase represents defrauded stock market investors nationwide.
