Securities Lawyers Blog
The securities lawyers of Gana Weinstein LLP represent investors that were sold NorthStar Healthcare Income Inc., (NorthStar Healthcare) – a non-traded real estate investment trust (non-traded REIT). Our representations focuses on the failure of the investor’s brokerage firms to conduct adqueate due diligence on NorthStar Healthcare pior to recommending the investment for their client in addition to other suitability violations of the securities laws. Our firm continues to be contacted on nearly a daily basis concerning their investment in this product.
NorthStar Healthcare continues to report that it is not profitable. NorthStar Healthcare has reported massive investor losses on investor capital raised and currently trades at only 25 cents for every dollar purchased on the secondary markets. On November 29, 2019 investors received a letter from Comrit Investment 1, LP (Comrit) offering investors the opportunity to sell the REIT for only $2.86 a share – again reflecting the dire state of affairs for NorthStar Healthcare. According to the September 2019 financial data Northstar raised over $1.7 billion from investors and has accumulated losses of $1 billion of it leaving a net equity of less than $700 million. In fact, in the last 9 months since the end of 2018 Northstar reports that investor equity declined another 7% while it has not paid investors any distributions.
As investors are aware, NorthStar Healthcare no longer distributes a dividend. Further, a review of NorthStar Healthcare’s dividend history reveals that most distributions received were merely fraudulent returns of investor capital and not profits on investments. Indeed, not one penny returned to investors since 2015 was from the REIT’s profits. NorthStar Healthcare’s continuing return of capital to investors since 2015 served only to allow the company to raise more investor money and make it appear to investors as if the company was a profitable enterprise when it never was.
According to the NorthStar Healthcare’s website, the investment formed to originate, acquire and asset manage equity and debt investments in healthcare real estate. NorthStar Healthcare claims that it is focused on making investments in the needs-driven senior housing sector including independent living facilities, assisted living, memory care, and skilled nursing facilities. NorthStar Healthcare launched in February 2013 and raised total gross proceeds of $2 billion, including $225.3 million through its distribution reinvestment plan. The company claims to have a $2.4 billion portfolio of 633 properties as of the June 2019.