Investor Lawyers Blog
Investors in American Healthcare REIT (as referred to below as “AHR”) may have FINRA arbitration claims, if their initial investment in Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, or American Healthcare Investors 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.
AHR, a non-traded real estate investment trust formed by the 2021 merger of Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors, is reportedly seeking to raise about $700 million in an initial public offering of its shares, as reported by Bloomberg. If the plan moves forward, AHR would sell newly issued shares to the public and its existing shares would also later become tradeable on the New York stock Exchange under the ticker symbol “AHR”.
AHR acquires, owns, and operates a portfolio of properties such as medical office buildings, senior housing, skilled nursing facilities and hospitals, according to public filings with the Securities and Exchange Commission. It reportedly owns nearly 300 properties in states including Indiana, Michigan, Missouri, Ohio and Texas, and values its assets at about $4.6 billion as of Sept. 30, 2023.
Previously, on January 11, 2023, AHR issued a statement in response to a third-party tender offer from an investor known as Comrit seeking to purchase up to 228,136 shares of the REIT at a 58% discount to its most recently estimated NAV per share. The tender offer was for $13.15 a share, which is far lower than then AHR’s estimated NAV per share of $31.30 a share. AHR’s board made no recommendation to shareholders to accept or reject the Comrit tender offer, despite the fact that the price offered is far below the REIT’s estimated NAV.
AHR shares underwent a one-for-four reverse split back in November 2022. AHR shareholders have experienced other setbacks including reduced distributions and the suspension of redemptions. On March 15, 2023, AHR’s board of directors authorized a reduced quarterly distribution from $0.40 per share to $0.25 per share, citing the need to preserve liquidity to help the company “achieve its long-term strategic goals.” AHR also suspended repurchases or redemptions from investors in November 22, leaving investors with limited options to sell their shares of the REIT should they wish to do so.
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.
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).
THIS ARTICLE IS INTENDED AS ATTORNEY ADVERTISING AND IS NOT AN OFFICIAL ANNOUNCEMENT