LOSSES IN REAL ESTATE INVESTMENT TRUSTS (REITS)

Did you lose money after your broker encouraged you to invest in real estate investment products to generate income or to diversify your portfolio?

It is well known that real estate values have dwindled in America over the past few years.  Regardless, many banks and brokerage firms have continued to encourage their clients to invest in real estate products to diversify their portfolios or to generate income.   Many brokers led investors to these risky products with attractive yield percentages and misled investors by selling these products as “CD alternatives,” “preferred stocks,” or even “bonds.”  Unfortunately, the true risks associated with these products were not disclosed, and investors have lost all or a significant amount of their investments, have not received the yield percentages that were touted, or are unable to access the money they invested.

Investors are filing claims against banks and brokerage firms for losses suffered in the following:

1). Non-Traded REITs – Non-traded (or private) REITs are securities offered by your bank or brokerage firm that are not listed or traded on a public exchange. These products often offer attractive yields; however, many have reduced the advertised distribution amounts, have stopped making distributions to investors, or have forbidden investors from accessing their money.  In other words, many investors in non-traded REITs are finding that they are receiving much less income than anticipated, no income at all, or that they cannot access any of their investment dollars.

             2). Traded REITs – Traded REITs are securities sold by your bank or brokerage firm that are listed and traded on a public exchange.  These securities often offer attractive yields and trade similarly to common stocks; however, traded REITs share the downside risks of common stocks.  Your broker may have told you that you were purchasing a “bond” or “preferred stock” when you actually purchased a REIT.  Many investors in traded REITs have suffered significant losses due to decreases in share price or have been unable to find buyers for their now worthless shares due to financial problems of the underlying real estate company.

             3).  Other Real Estate Projects – Many investors have been approached by representatives of banks and brokerage firms to invest in or make loans to real estate projects organized by that representative or a business partner or friend of that representative.  Investors are often approached despite not having a relationship with the particular bank or brokerage firm.  The projects often promise attractive returns or yields much greater than what is offered by the bank or brokerage firm.  The investments are not offered by the bank or brokerage firm and often involve condominium and commercial real estate developments and oil/gas exploration.  Unfortunately, investors often lose all or a significant portion of their investments in these projects and find that the projects were scams or were poorly managed. The bank or brokerage firm, however, still may be liable for investor losses in these projects.

If you wish to discuss your investment in REITs or other real estate investments offered by representatives of banks or brokerage firms or have questions about securities fraud and want to know if you have a case, please contact us at (727) 461-7474 or visit our Investor FAQs page and fill out the Do I Have a Case form at www.colemanlaw.com.

For more information about Securities fraud, or estate planning, particularly if you are in Clearwater, Palm Harbor, Tarpon Springs or the Tampa Bay, Florida area, go to our website www.colemanlaw.com.