- March 17, 2019
- Northstar Healthcare Income
The Wolper Law Firm is currently representing clients in the recovery of investment losses realized in Northstar Healthcare Income, Inc., a non-traded real estate investment trust (“Non-Traded REIT”). The Northstar Healthcare Income, Inc. Non-Traded REIT is sponsored by Colony Capital, Inc.
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 Northstar Healthcare Income, Inc. Non-Traded REIT. 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 Northstar Healthcare Income, Inc. Non-Traded REIT was issued in 2013 at a price of $10.20.
According to its prospectus, “investing in our common stock is speculative and involves substantial risk.” 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 Northstar Healthcare Income, Inc. Non-Traded REIT is only suitable for those investors with aggressive risk profiles who have a long-term investment horizon.
In December 2018, the board of directors of the Northstar Healthcare Income, Inc. Non-Traded REIT announced that the net asset value of its shares was $7.10, representing a more than 30% declined from its initial offering price. The board of directors cited numerous factors in the revision of its net asset value, including the following:
- “Northstar Healthcare’s portfolio is facing occupancy challenges”
- “Labor costs in Northstar Healthcare’s investments have increased”
- “Downward pressure on cash flow”
Shortly after announcing the reduction in its net asset value, which caused significant losses to investors, in February 2019, the Northstar Healthcare Income, Inc. Non-Traded REIT announced that it was suspending its dividend. The net effect of this board decision is that investors will now no longer receive any income from their investment in the Northstar Healthcare Income, Inc. Non-Traded REIT. After the announcement that the dividend had been suspended, the price per share of the Northstar Healthcare Income, Inc. Non-Traded REIT further declined. As of February 2021, the secondary trading value of the Northstar shares is less than $2.00 per share, rendering investors’ shares essentially worthless.
At this stage, investors of the Northstar Healthcare Income, Inc. Non-Traded REIT 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.
To discuss your recovery options in the Northstar Healthcare Income, Inc. Non-Traded REIT, 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 hundreds of 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 email@example.com.