Private Placements

Published on: March 19, 2013

Dividend Capital REIT Investors Could Recover Losses

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the non-traded Dividend Capital Total Realty Trust Inc. Potential claims related to the Dividend Capital REIT include unsuitable recommendations, misrepresentation and overconcentration of investment funds. Dividend Capital REIT invests in diverse real estate-related securities and debt as well as real properties.

Dividend Capital REIT Investors Could Recover Losses
The 8-K form filed by Dividend Capital Diversified Property Fund on February 1, 2013 stated that its current NAV, or net asset value, is $6.72 per share. However, this “book value” may not reflect what investors can actually get for their shares. Because the Dividend Capital REIT is non-traded, investors are forced to sell through a relatively illiquid secondary market, in which there may be no buyers of Dividend Capital shares at prices at or near the REIT’s book value.

Securities fraud attorneys say new investor concerns are being raised about Dividend Capital REIT’s redemption plan. According to the company’s 10-Q form, during the quarter ending September 30, 2012, the REIT has not redeemed any Class I, Class W or Class A shares. Furthermore, at any time, Dividend Capital can terminate, suspend or modify the share redemption program.

Published on: March 12, 2013

Hines REIT Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the non-traded Hines REIT. Potential claims related to the Hines REIT include unsuitable recommendations, misrepresentation and overconcentration of investment funds. The Hines REIT was launched in 2004; as of September 20, 2012, it comprised 55 properties in 24 geographic markets. As of December 2009, Hines suspended its share redemption plan except when in connection to the disability or death of a stockholder.

Hines REIT Investors Could Recover Losses

Unfortunately, Hines REIT investors have found themselves in a tight spot when they want to sell their investment. Because the Hines REIT is non-traded, investors are forced to sell through a secondary market, through an auction or privately. Investors who sell through a secondary marketmay be forced to accept a price far below their purchase price. Investors also may choose to hold onto their shares in the hopes that the real estate investment trust will decide to make a public offering and register with the Securities and Exchange Commission or pursue another liquidity event such as a merger with a publicly traded company.

Investment fraud lawyers are investigating the possibility that full-service brokerage firms may be held liable for the recommendation of the Hines REIT. Financial Industry Regulatory Authority rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Non-traded REITs like this one are illiquid and inherently risky and, therefore, not suitable for many investors.

Published on: March 5, 2013

CommonWealth REIT Announcement More Bad News for Investors

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in CommonWealth REIT. CommonWealth REIT recently announced that it would commence a public offering intended to pay down as much as $450 million in senior notes. The public offering would be for 27 million shares of stock, which would dilute its outstanding share count by almost 30 percent.

CommonWealth REIT Announcement More Bad News for Investors

The CommonWealth real estate investment trust primarily owns and operates real estate, such as industrial buildings, office buildings and leased industrial land. Following the announcement for CommonWealth REIT’s fourth-quarter earnings results and the 27 million share offering, the REIT’s price dropped by as much as 11 percent. According to the fourth-quarter report, a loss of $1.96 million was reported by the company as a result of a $168.6 million asset impairment.

Furthermore, between January 10, 2012 and August 8, 2012, CommonWealth allegedly issued false and misleading statements regarding its financial standing and prospects which, if proved to be true, would be a violation of the Securities Exchange Act of 1934. Furthermore, in an announcement on August 8, 2012, CommonWealth stated that it would likely be reducing its dividend payment. Investment fraud lawyers also note that from 2008 to 2011, the company’s net income fell from $244.65 million to $109.98 million, a decline of $134.67 million. For more information on this issue, see the previous blog post, “CommonWealth REIT Investors Could Recover Losses.”

Published on: February 28, 2013

Recovery of Grubb & Ellis REIT Losses Possible

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Grubb & Ellis REITs. For the period ending March 21, 2011, Grubb & Ellis Company reported an $18.3 million net loss. The company included charges of $2.3 million for bad debt, $3.5 million for depreciation and amortization, $1.7 million for amortization of signing bonuses, $1.7 million in share-based compensation and $0.5 million for intangible asset impairment.

Recovery of Grubb & Ellis REIT Losses

Grubb & Ellis is an investment and commercial real estate services firm. Grubb & Ellis Healthcare REIT acquired Oklahoma City Medical Portfolio in 2008, which consisted of two medical office buildings. Grubb & Ellis Healthcare REIT II acquired four properties comprising five medical office buildings in 2011. Grubb & Ellis Apartment REIT made arrangements to acquire Bella Ruscello Luxury Apartment Homes in 2010.

Securities arbitration lawyers say non-traded REIT investments like the Grubb and Ellis REITs typically offer commissions between 7-10 percent, which is significantly higher than traditional investments like mutual funds and stocks. In some cases, the commission generated by these investments can be as high as 15 percent. This higher commission can explain why brokerage firms are motivated to recommend these investments despite their possible unsuitability.

Published on: January 31, 2013

Bambi Holzer Still Trading Despite Numerous Customer Complaints

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Bambi Holzer. According to a Forbes article, Holzer’s investment advice has resulted in securities settlements amounting to more than $12 million. Despite this article, which appeared three years ago, her trades are still being cleared by brokerage firms.

Bambi Holzer Still Trading Despite Numerous Customer Complaints

Currently a broker at Newport Coast Securities, Holzer has also worked with a number of other firms, including UBS, Brookstreet Securities Corporation, AG Edwards, Wedbush Morgan Securities Inc. and Sequoia Equities Securities. Holzer and UBS have already been compelled to pay to settle securities claims amounting to $11.4 million. These claims alleged that Holzer misrepresented variable annuities through misrepresentation of guaranteed returns. Holzer was fired from AG Edwards in 2003 for allegedly engaging in business practices that did not coincide with the firm’s policies. Further allegations against Holzer include misrepresentations while at Brookstreet. These misrepresentations allegedly occurred in 2005 at a Beverly Hills presentation at which Holzer allegedly stated that a fictional couple was able to make $9 million by deferring $732,000 in taxes through the use of trusts. In another claim, a customer of Wedbush Morgan Securities alleged breach of fiduciary duty, account mishandling, and breach of contract that allegedly resulted in damages of $824,000.

According to securities fraud attorneys, allegations against Holzer include fraud, churning, unsuitable investments, misrepresentations of fees, Securities Act violations, private placement-related fraud, negligent representations related to variable annuities, inadequate supervision, variable annuity-related fraud, negligent recommendation and sale of Provident Royalties LLC, negligent sale and recommendation of Behringer Harvard Security trust and other unsafe products as well as elder abuse.

Published on: January 22, 2013

CommonWealth REIT Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in CommonWealth REIT. Allegedly, between January 10, 2012, and August 8, 2012, CommonWealth issued false and misleading statements regarding its financial standing and prospects which, if proved to be true, would be a violation of the Securities Exchange Act of 1934.

CommonWealth REIT Investors Could Recover Losses

The CommonWealth real estate investment trust primarily owns and operates real estate, such as industrial buildings, office buildings and leased industrial land. Allegations currently being investigated by securities arbitration lawyers are that CommonWealth failed to disclose certain facts, including the fact that leased office spaces had fallen below expectations, existing tenants were receiving concessions which were eroding CommonWealth’s income and, as a result, CommonWealth’s positive statements about its occupancy rate, dividend payout and leverage ratio were not reasonably founded.

An announcement on August 8, 2012, stated that CommonWealth would likely be reducing its dividend payment. Among the reasons cited for this reduction were that its available cash for distribution payout ratio had increased and its occupancy rate had decreased. Following this announcement, the per share price of CommonWealth fell $1.57, or 9 percent, closing at $16.48 that day. Investment fraud lawyers say that by October 26, 2012, shares were trading at $13.58, a 52-week low. Furthermore, while CommonWealth REIT’s annual revenue increased from 2008 to 2011, its net income fell in that same period from $244.65 million to $109.98 million, a decline of $134.67 million.

Published on: January 15, 2013

Behringer Harvard REIT I Share Price Cut Again

by InvestorLawyers

On December 20, 2012, Behringer Harvard REIT I officials stated that its per share price valuation was decreasing from $4.64 per share to $4.01 per share. Securities fraud attorneys say this last devaluation represents a significant decline from its original offering price. Behringer Harvard REIT I has assets amounting to $4.2 billion. Allegedly, the devaluation is a result of funding leasing and operating costs with the use of assets, distribution payments and reductions in the value of its real estate assets and debt.

Behringer Harvard REIT I Share Price Cut Again

Non-traded REITs, such as Behringer Harvard REIT I, carry a relatively high dividend or high interest, making them attractive to investors. In many cases, stock fraud lawyers say brokers may have represented Behringer Harvard REIT I as a safe, conservative investment. However, in reality, non-traded REITs are inherently risky and illiquid. Some of the factors that make REITs risky investments are that distributions are not guaranteed, valuation complexities and illiquidity can be created if there is a deficiency of a public trading market, redeeming the investment early is often expensive and restrictive and non-traded REITs’ valuation can be affected by many factors, including the trust’s balance sheet strength, cost of capital, overhead expenses and the portfolio of assets owned.

As a public non-traded REIT, Behringer Harvard REIT I may have carried a high commission which may have motivated brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Securities fraud attorneys say that if Behringer Harvard REIT was misrepresented by their brokers as safe, clients may be able to recover losses through securities arbitration. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT, which resulted in an over-concentration that was unsuitable for investors.

Published on: January 10, 2013

Inland American REIT Share Price Cut Again

by InvestorLawyers

On December 19, 2012, Inland American Real Estate Trust Inc. stated that its per share price valuation was decreasing from $7.22 per share to $6.93 per share. Securities fraud attorneys say this last devaluation represents a 30 percent decrease from its original price of $10 per share. With assets amounting to $12.2 billion, Inland American REIT is the largest REIT that has seen a decline in valuation recently. Allegedly, the devaluation is a result of increased capitalization rates.

Inland American REIT Share Price Cut Again

Non-traded REITs such as Inland American carry a relatively high dividend or high interest, making them attractive to investors. And in many cases, stock fraud lawyers say brokers may have represented Inland American REIT as a safe, conservative investment. However, in reality, non-traded REITs are inherently risky and illiquid. Some of the factors that make REITs risky investments are that distributions are not guaranteed, and shares can be very difficult to sell because there is no public trading market. Non-traded REITs’ valuation can be affected by many factors, including the trust’s balance sheet strength, cost of capital, overhead expenses and the portfolio of assets owned.

Public non-traded REITs often carry high commissions that can motivate brokers to recommend them to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Securities fraud attorneys say that if Inland American REIT was misrepresented by their brokers as safe, clients may be able to recover losses through securities arbitration. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT which resulted in an over-concentration that was unsuitable for investors.

Published on: November 21, 2012

Berton Hochfeld Charged with Securities Fraud, Allegedly Stole $1 Million from Investors

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of customers of Berton Hochfeld, following the announcement that Hochfeld has been charged with securities fraud and wire fraud. Hochfeld, the 66-year-old manager of Hochfeld Capital Management LLC, allegedly stole over $1 million from investors. According to an article in Bloomberg, Hochfield was arrested the morning of November 9, 2012 at his home in Stamford, Connecticut.

Berton Hochfeld Charged with Securities Fraud, Allegedly Stole $1 Million from Investors

Hochfeld Capital Management LLC had an office at Park Avenue in New York that reportedly functioned as a Heppelwhite Fund general partner. According to the allegations against Hochfeld, he stole investor funds for his own use during the period of April 2011 to October 2012. The complaint also states that a private placement memorandum for the Heppelwhite Fund stated it would not purchase debt obligations issued by, or make loans to, Hochfeld Capital Management and/or principals of the LLC. Furthermore, according to the sworn complaint by U.S. Federal Bureau of Investigation Special Agent Michael Howard, in monthly statements provided by Hochfeld, the value of the fund was falsely inflated, concealing his withdrawals from investors. Private placement fraud like this is routinely investigated by stock fraud lawyers in order to recover stolen funds from investors.

Customers of Berton Hochfeld and/or Hochfeld Capital Management LLC who were customers of the firm during the time period stated above are encouraged to contact a securities fraud attorney as soon as possible. If convicted of both charges, Hochfield could face as many as 40 years in prison.

Published on: November 5, 2012

Recovery of Inland American REIT Losses

by InvestorLawyers

Many investors are currently seeking recovery of their Inland American REIT losses through Financial Industry Regulatory Authority securities arbitration. Following Inland American’s 10Q Securities and Exchange Commission Q1 filing, investors were made aware of a current investigation being conducted by the SEC. According to this 2012 quarterly report, which was issued in May, Inland American had “learned that the SEC is conducting a non-public, formal, fact-finding investigation to determine whether there have been violations of certain provisions of the federal securities laws regarding our business manager fees, property management fees, transactions with our affiliates, timing and amount of distributions paid to our investors, determination of property impairments, and any decision regarding whether we might become a self-administered REIT.”

Recovery of Inland American REIT Losses

Inland American’s prospectus, initially filed in August 2005, shows fees and commissions including a .5 percent due diligence expense allowance, a 2.5 percent marketing contribution and a 7.5 percent selling commission. Furthermore, Inland American’s 2011 annual report indicates that a $40 million business management fee and a $1.6 million investment advisory fee to be paid to its business manager.

Other concerns related to the Inland American REIT that investors should be aware of include the fact that even though it was recognized as the largest non-traded REIT, with real estate assets totaling over $11 billion, nearly 30 percent of the REIT’s properties are located in only four cities. The quarterly report cited above states that “Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas or natural disasters in those areas.” Furthermore, the report discloses the fact that around 16 percent of the properties owned by the REIT are leased by SunTrust Bank and AT&T.