We continue to prosecute claims against brokerage firms like LPL for sales of non-traded REITs like Hines REIT. Hines is a real estate investment trust also organized as a Maryland corporation and operates out of its principal office in Houston, Texas. According to its website:
Hines REIT invests primarily in domestic office properties – those often described as “core”. Core properties are characterized by the following: prime locations, quality tenants and high occupancy, quality construction with little or no renovations needed, and potential for stable rental income. Hines REIT also diversifies into international and non-office properties that meet investment objectives. The goal is to create a diverse portfolio to reduce risk of reliance on a particular market, property or tenant.
Like Inland American, Hines REIT shares are not listed on any public or national securities exchange. Thus, there is very little to no market available for those who wish to sell their shares of Hines REIT. This creates a serious liquidity problem, and it also makes it difficult to accurately price these securities. According to documents filed with the SEC, Hines REIT offered selling commissions to broker dealers of up to 7% of proceeds. Moreover, the participating broker-dealers were also entitled to an additional 2.2% of gross offering proceeds in the form of a Dealer Manager Fee. Thus, brokerage firms could have recouped as much as 9.2% of sales proceeds as commissions and fees for selling Hines REIT to the Claimants. No other investment offered by brokers had a higher commission or fee structure than this investment. This is the primary reason the investment was recommended in most cases.
According to Hinesreittender.com tender offers of $4.00 - $4.75 a share were being offered to Hines REIT shareholders recently. Investors are looking a minimum fifty percent loss on this “stable income” investment. Hines recently disclosed in its 10K filings with the SEC that it has suffered massive net operating losses in two of the last three years. Hines also discloses that it too is returning investor principal, not capital, as dividends.
For investors who have suffered investment losses in Hines, they have legal options to recover these losses against the brokers who recommended the positions. To learn more, please call us for a no cost review.