• August 17, 2023
• Hartman vREIT XXI

The Wolper Law Firm is currently investigating claims against brokerage firms and financial professionals who sold retail clients the Hartman vREIT XXI, a non-traded real estate investment trust (“Non-Traded REIT”).  The Hartman vREIT XXI is sponsored by Hartman Income REIT Management, Inc.

Non-Traded REITs

Non-Traded REITs are securities that do not trade on a public securities exchange.  For this reason, Non-Traded REITs can be illiquid, meaning investors may be unable to sell their investments on demand.  The underlying collateral of the REITs consists of income producing residential or commercial real estate.  Typically, the commissions generated on Non-Traded REITs are higher than industry norm (approx. 7%) and the investments themselves may be subject to extreme volatility due to associated risk factors.  Non-Traded REITs are only suitable for investors with a long-term investment horizon who are willing to accept higher levels of risk in their investments.

From 2013 forward, many Financial Advisors recommended Non-Traded REITs to their cleints, including the Hartman vREIT XXI.  Financial Advisors represented that Non-Traded REITs were safe, income producing investment vehicles.  Financial Advisors baited clients with the prospect that Non-Traded REITs would eventually “go public.”  These representations were misleading, at best.

Many Non-Traded REITs have performed poorly and have suspended/reduced their dividend.  Moreover, Non-Traded REITs are completely illiquid, meaning investors have no ability to sell the Non-Traded REIT in the secondary market in order to preserve principal.

The Hartman vREIT XXI was issued in 2016 after raining approximately $91.6 million of investor capital at a price of $10.00 per share.    The Registration Statement filed with the Securities and Exchange Commission can be accessed here.  The Hartman vREIT XXI is currently trading at approximately $2.50, representing a 75% decline.  Moreover, in February 2023, the Hartman vREIT XXI suspended its dividend payments, eliminating the income payments relied upon by many investors.

Its CEO announced that “while our revenue has increased, we do not anticipate a meaningful decline in interest rates for the 2023 calendar year,” Allen R. Hartman, executive chairman and chief executive officer, said in a letter to shareholders. “Because of that, it is not anticipated that [Hartman vREIT] XXI will be able to pay a distribution for the foreseeable future as we navigate these market conditions.”  Managing borrowing costs and interest rate risk within Non-Traded REITs is essential to the long-term success of the investment.

According to its prospectus, “this investment involves a high degree of risk.”  However, many investors were not aware of these prospectus disclosures or were told by their Financial Advisors that the risk disclosures were merely “boilerplate” and that the actual risks of Non-Traded REITs were minimal.  In reality, the Hartman vREIT XXI is only suitable for those investors with aggressive risk profiles who have a long-term investment horizon.

At this stage, investors of the Hartman vREIT XXI are holding an illiquid investment with substantial principal losses that no longer pays a dividend.  This outcome is completely contrary to the representations made by Financial Advisors at the time of purchase.

Recovery Options

To discuss your recovery options in the Hartman vREIT XXI, please contact the Wolper Law Firm for a free, confidential consultation.  The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled more than 1,000 securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at (800) 931.8452 or by email at mwolper@wolperlawfirm.com.