Investors in Healthcare Trust, Inc. (“HTI”), which was formerly known as ARC Healthcare Trust II, 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. Investors may also have claims if a broker or advisor has recommended HTI as part of an investment portfolio that is excessively concentrated in illiquid alternative investments.
HTI, a publicly registered, non-traded real estate investment trust or “REIT”, recently announced that it intends to transition to self-management in anticipation of a potential future listing of its common stock on a national securities exchange. The REIT expects the internalization to close no later than the fourth quarter of 2024.
HTI reportedly acquires, owns, and manages a diversified portfolio of healthcare-related real estate, focused on medical office and other healthcare-related buildings, and senior housing operating properties. As of March 31, 2024, the company reportedly owned 208 properties located in 33 states and comprised of 9.1 million rentable square feet. Its total assets were approximately $2.13 billion, about a 1.68% decrease from the previous year’s approximate $2.17 billion.
HTI’s management has stated that its estimated net asset value (or “NAV”) per share is $14.00, which is significantly lower than the initial offering price of $25.00/share. However, bids and offers in the very limited online secondary market show that shares have changed hands for as little as $2.50 a share, suggesting that investor losses may be far higher than the REIT has acknowledged to date.
As a publicly registered non-traded REIT, HTI was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares upon the recommendation of a broker or money manager. HTI began offering shares to the public in 2013 and reportedly raised of $2 billion via sales of stock.
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.
If HTI lists its shares on a stock exchange, investors’ ability to sell their shares will be enhanced. However, past history of direct listings of non-traded REITs on stock exchanges suggests that the REIT’s shares will likely trade at a substantial discount to their net asset value or “NAV”. Investors may be in for a surprise if they are relying on the reported NAV of $14.00 as reflecting the value that they can realize when they sell shares.
Investors who wish to discuss a possible claim concerning HTI or another alternative investment 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. 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.