Investor Lawyers Blog
Many investors are seeking avenues for recovery of REIT losses sustained in Behringer Harvard REIT I. This is only one of the Behringer Harvard REIT investments currently under investigation by stock fraud lawyers. Retired investors in particular have suffered unnecessary losses due to the unsuitability of this investment.
Recently Behringer Harvard itself discovered it was being sued when an investor filed a class action in the U.S. District Court for the Northern District of Texas in September. The investor, Lillian Hohenstein, purchased 1,275 shares between 2004 and 2008. The case alleges breach of fiduciary duty and negligence by the trust, members of its board and its executives. In addition to the class action, many brokerage firms who sold the investment are facing arbitration panels for their unsuitable recommendation of Behringer Harvard REIT I.
The main problem with Behringer Harvard REIT I is that many investors were led to believe the investment was safe and similar to high quality, fixed income securities and chose to invest because they believed it was a low-risk, income-producing investment. However, these investors were not aware of the high risks and illiquidity associated with non-traded REIT investments. Many investors also did not realize that they were not guaranteed distributions and some of the distributions that were made before distributions ceased came from loans, and not cash flows generate by the REIT. Furthermore, many retired individuals were overconcentrated in this investment because of its perceived income-producing feature. As a result, many investors have suffered significant REIT losses.
Typically, REITs carry a high commission, which motivates some 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. Non-traded REITs carry a relatively high dividend or high interest, making them attractive to retired investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors.
If you suffered significant REIT losses as a result of your investment in Behringer Harvard REIT I, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.