REIT loss can be recoverable. Not every investment is appropriate for every investor. REITs are speculative investments exposing investors to a level of risk investors never intended to take. We represent REIT investors and have represented many such investors over the past 20 years who have been inappropriately sold REIT investments.
In 2023, non-traded REIT sales fell to historic lows. Consequently, many of these investments reduced redemptions and became insolvent. Also known as NAV REITs, these investments have always been known to be highly risky investments with the potential to become illiquid.
An advisor’s recommendation of these investments is often fraudulent. Advisors sell these REITs under the guise that they help the investor escape the volatility of the stock market. The truth is that these investments are just as volatile. The only difference is that the non-traded REITs have no public market or transparency of their financials so could quickly be going out of business with little to no warning. Advisors love selling these investments because the commissions can be 10 to 15 times greater than a mutual fund, fixed income or stock investment. As a result, the commission is the reason for the recommendation as opposed to the best interests of the investor.
Blackstone (BREIT) is the most notable troubled REIT since it is the largest non-traded REIT. This REIT is troubled and has been troubled for years. BREIT has limited yearly redemptions to 5%. Advisors commonly describe this investment as having moderate risk despite these troubles. Many other similarly troubled non-traded REITs exist.
Even REITs traded on the major exchanges suffered considerable losses and were known to be speculative. Medical Properties Trust REIT lost 50% of its book value as of March 2023. The REIT is suffering, along with many others in the sector experiencing REIT loss, from investors selling as the banking crisis remains and interest rates rise. Lower expectations for a reduction in interest rates are causing real estate assets to lose their appeal.
Other publicly traded REITs losing substantial value are Brandywine Realty Trust, Boston Properties, Healthcare Realty Trust, Invitation Homes, Piedmont Office Realty Trust, and Prologis.
Please contact us. We can provide you with a free initial consultation.