Investors in the Cornerstone Core Properties REIT Inc. were recently told by the company that the shares, once valued at $8, are now worth $2.25 (see article in InvestmentNews by Bruce Kelly). The article references a letter from the REIT's chairman and chief executive Terry Roussel, as saying "The estimated per-share value has been adversely affected by the recent global economic downturn, negatively impacting our small business tenant base, which has resulted in approximately $43 million of previously announced impairment charges recorded in the second and third quarters of 2011."
Anthony Chereso, CEO of FactRight LLC, a due-diligence firm that covers managers of alternative investments indicated that "A couple of years ago, the sponsor had some regulatory issues and had to shut down capital raising," and that "It had some properties with tenant issues, and the portfolio had issues with covering debt and distributions. It was not constructed well." FactRight recommended that broker-dealers pull the Cornerstone Core Properties REIT from their platforms last year, Mr. Chereso said. Mr. Chereso also noted, "Their only option is to liquidate ... There's not a whole lot that can be done to revive it."
The collapse of the Cornerstone Core Properties REIT is indicative of the problems with non-traded REITS. According to Robert Pearce, a Boca Raton, Florida based securities attorney, "They are all illiquid; their valuations on statements are oftentimes at cost; and the REITs have had to borrow funds to make distributions and appear healthy." According to Mr. Pearce, "Too many retirees have been misled and sold unsuitable REIT investments and they have the right to sue!" The Law Office of Robert Wayne Pearce, P.A. has already filed arbitration claims for several investors and is aggressively pursuing their claims.
The Financial Industry Regulatory Authority Inc. (FINRA) has issued an Investor Alert to inform investors of risks of non-traded REITs. The SEC is also reportedly investigating disclosures regarding how non-traded REITs are valued.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.