NorthStar Healthcare REIT has suffered massive losses and is worth only a fraction of a purchased dollar on the secondary market. Attorneys at Haselkorn & Thibaut are investigating financial advisors that had clients invest in Northstar Healthcare Income Inc, a non-traded real estate investment trust (REIT). NorthStar health’s investment object is focused on the needs-based senior housing sector, including independent living facilities, assisted living, memory care, and skilled nursing facilities.
For investors, the latest estimated valuation not only reflects a decrease in the estimated NAV price (as of June 30, 2019), it also appears to be based on calculations that used third-party appraisals for at least 15 of the properties owned by Northstar Healthcare. This is, of course, following on the heels of the February 2019 decision by Northstar Healthcare to suspend distributions to investors (after previously cutting the distribution rate by more than 50%).
The timeline here for investors includes a significantly reduced distribution rate followed more recently (earlier this year) by a suspended distribution, and, now, a reduction in the estimated NAV prices. According to Palm Beach, Florida investment fraud lawyer Matthew Thibaut, Esq. “this recent drop in estimated NAV value looks like more bad news for investors in Northstar Healthcare.”
Northstar Healthcare Income Inc Investigation – 2020 Northstar Healthcare Income Update
Securities fraud lawyers at Haselkorn & Thibaut are investigating the sales practices from financial advisors that had their clients to invest in NorthStar Healthcare Income Inc. (NorthStar Healthcare) – a non-traded real estate investment trust (Non-traded REIT). According to news sources, NorthStar Healthcare has huge losses and may not be worth less than 30 cents per dollar purchased. Besides, NorthStar Healthcare no longer distributes a dividend – and there was only a return on the principal of investors and not funds from any business operations.
Many financial advisors do not understand the problems non-traded REIT business models and only recommend these products to their 7% commission – not because they benefit investors.
According to The DI Wire, in December 2017, NorthStar Healthcare reduced its distribution rate from 6.67% to 3.31%. A year later NorthStar Healthcare reduced its joint-stock value from $8.50 per share to $7.10 per share. In addition, in October 2018, NorthStar Healthcare told shareholders that it was suspending its repurchase program – if the shareholder was not dead or had a qualified disability.
However, these valuation metrics are in serious doubt. Firstly, by NorthStar Healthcare disclosures, the company did not pay any return on investment in three years and instead only took the investor’s original investment capital with huge loans to return these funds. Accordingly, NorthStar Healthcare’s financial affairs from March 2019 show investor equity of only $900 million – where did the other $1.1 billion rise?
The huge loss of investor capital has resulted in secondary market sources for non-traded REITs to list NorthStar Healthcare for $2.85 per share or net asset value, indicating a massive loss to investors.
What is Northstar Healthcare REIT?
Northstar Healthcare Income Inc is a public, untraded REIT created “to create, acquire and own healthcare assets in the United States and Canada,” according to the company’s website.
Launched in February 2013, NorthStar Healthcare REIT has generated gross proceeds totaling $2 billion through asset sales in the United States, Canada, and Australia, including $225.3 million as of June 30, 2015. Griffin American Healthcare (“REIT III”), which focuses primarily on healthcare facilities, acquired a portfolio of healthcare facilities totaling 67 buildings in North America and Canada on August 14, 2015, with a focus on retirement homes.
The REIT is co-financed by Griffin American Healthcare, a subsidiary of Griffin Medical Group, Inc., and Griffin Health Systems.
How Can Northstar REIT Investors Recover Losses
Haselkorn & Thibaut, a national investment fraud law firm, represents Northstar REIT investors and deals with cases of direct participation products (DPPs), private placements, non-traded REIT, and other alternative investments. These products are not always suitable for middle-class investors.
According to studies, historically there are non-traded REITs are not safe investments even safe benchmarks are achieved. This means that non-traded REIT provides paltry investment returns considering the risk an investor takes. Alternative investment products such as oil and gas partnerships, REITs, and equipment leasing programs are only suitable for a small group of investors under certain conditions due to high costs, liquidity, and major redemption charges for the products, if they can be redeemed at all. no.
Financial advisor and brokers are often motivated because of the commission they earn on these products they sell them to investors. These products are so popular among brokers that many states now limit investors to invest more than 10% of their liquid assets in a non-traded REIT. States impose these limitations because it realized that they provide virtually no benefit to investors on their risks.
Investors can call 888-628-5590 or visit Haselkorn & Thibaut for a free consultation on how to recover Northstar Healthcare losses.