Everest REIT Investors Launch Tender Offer for Griffin-American Healthcare REIT III Shares – Investors May Have Arbitration Claims

Investors in Griffin-American Healthcare REIT III (“GAH REIT III”), 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 broker or financial advisor.  GAH REIT III is sponsored by American Healthcare Investors and Griffin Capital Company, LLC, firms that according to publicly available information have completed transactions totaling approximately $30 billion in commercial real estate investments since 1990, of which approximately $8 billion in transactions have been healthcare-related.

GAH REIT III is a publicly registered non-traded real estate investment trust (“REIT”) incorporated in January 2013 as a Maryland REIT and is registered with the SEC.  As such, GAH REIT III was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares through the IPO upon the recommendation of a broker or money manager.

Recently, third party real estate investment firms Everest REIT Investors I LLC and Everest REIT Investors II LLC launched a $6.5 million tender offer for up to 1 million shares of GAH REIT III, at $6.50 per share.  The offer is set to expire on March 20, 2018.  Currently, Everest and its affiliates own 19,700 shares of GAH REIT III.

Investors who purchased shares of Griffin-American Healthcare REIT III through the offering acquired their shares at $10.  Thus, investors who participate in the Everest tender offer will incur substantial losses on their initial investment of approximately 35% (exclusive of commissions and distributions).  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 like GAH REIT III 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.  Therefore, many 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 position through redemption directly with the sponsor, and then on a limited basis, and often at a disadvantageous price.  Or, investors may be able to sell shares through a limited and fragmented secondary market.  Finally, investors may be presented with limited market-driven opportunities — such as a tender offer — to sell their shares at a disadvantageous price.

If you have invested in GAH REIT III, or another non-traded REIT, and you have suffered losses in connection with your investment (or are currently unable to exit your illiquid investment position without incurring considerable losses), you may be able to recover your losses in FINRA arbitration.  Investors may contact a securities arbitration lawyer at 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.