Investor Lawyers Blog
Investors in American Healthcare REIT Inc. (sometimes referred to below as “AHR”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.
Shares in the American Healthcare REIT were recently the subject of a mini tender offer to purchase Class T and Class I common sharers of the REIT for $8.50 per share, which equates to $2.13 a share after accounting for the November 2022 four-for-one reverse stock split in AHR shares. AHR’s Board of Directors announced it was neutral concerning these unsolicited offers.
Despite this neutrality, the tender offer is for a per share consideration far below AHR’s published estimated net asset value (NAV) per share of $31.40 as of December 31, 2022.
AHR was formed after a merger of Griffin-American Healthcare REIT III, Inc. and Griffin-American Healthcare REIT IV, Inc. in a merger that also involved the acquisition of the REITs’ sponsor and advisor, American Healthcare Investors LLC.
AHR reportedly has a 19.1 million-square-foot portfolio of 300 medical office buildings, skilled nursing facilities and integrated senior health campuses located in 36 states, the United Kingdom and the Isle of Man, in addition to a real estate-related investment. The gross investment value of the portfolio is reported to be approximately $4.4 billion. AHR filed a Form S-11 with the U.S. Securities and Exchange Commission (SEC) back in September 2022 announcing a plan to undertake an underwritten public offering of the REIT’s shares as well as a listing of AHR’s common stock on the New York Stock Exchange.
Non-traded REITs pose many risks that are often not readily apparent to retail investors, or adequately explained by the financial advisors and stockbrokers who recommend these complex investments. One significant risk associated with non-traded REITs has to do with their high up-front commissions, typically between 7-10%. In addition to high commissions, non-traded REITs generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.
Furthermore, non-traded REITs are generally illiquid investments. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange. Many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited. Typically, investors in non-traded REITs can only exit their investment through redemption directly with the sponsor on a limited basis, and often at a disadvantageous price, or through sales in a limited secondary market. As in this case, third party tender offers may also offer liquidity, but at a price that may or may not reflect the shares’ fair value.
Stockbrokers and financial advisors who sell non-traded REITs and other non-conventional investments have an obligation to recommend these investments only when they have a reasonable basis to recommend them to an individual customer. Advisors also may not sell non-traded REITs or other investments via a misleading sales presentation that omits to disclose material risks.
Investors with questions about claims against a stockbroker or investment advisor concerning AHR or other non-traded REITs or non-conventional investments may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).