The White Law Group continues to investigate the liability that brokerage firms may have for improperly recommending Strategic Realty Trust (formerly TNP Strategic Realty Trust) to its clients.
Strategic Realty Trust, formerly the TNP Strategic Realty Trust Inc., is a nontraded real estate investment trust started by Tony Thompson. The REIT, which began raising money in August 2009, was sold at $10 per share by representatives at various independent broker-dealers.
According to reports, Strategic Realty Trust Inc., recently told investors that the REIT's valuation had been reduced to $7.11 per share from $10, a decline of 29%. The decrease in the REIT's estimated value comes after an appraisal and review of its financial statements from Robert A. Stanger & Co. Inc., an investment bank. This share value is the "book value" of the Strategic Realty Trust. It is unclear whether shareholders could actually get anyone to pay $7.11/share for their shares.
According to a letter reportedly sent to shareholders announcing the decline in share value, Strategic Realty Trust, which owns a portfolio of 16 shopping centers, has seen transactions costs of $1.54 per share, offering and organization costs of $1.23 per share, return of capital to investors through distributions of $1.04 per share, and a per-share loss of 52 cents on a property in Hawaii.
The decline in Strategic Realty Trust's share value is surprising given that the REIT was started after the 2008 financial crisis and should have benefited from acquiring depreciated assets. Moreover, the market is up substantially from 2009 to present so a decline of 29% is catastrophic relative to how the market has performed as a whole.
Unfortunately, this is an all too common story for nontraded REIT investors. The cost structure of these investments makes it difficult for the investments to succeed even in the best of investing climates.
Depending on the investor's personal circumstances, these losses may be recoverable from the brokerage firm that recommended Strategic Realty Trust.
Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations made are suitable for their clients in light of the clients' age, income, net worth, tax status, investment experience, and investment objectives.
To discuss your litigation options with a securities attorney, please call The White Law Group at 312/238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.