A major non-traded real estate investment trust (REIT) is the focus of what may become a class action lawsuit. The investor bringing the suit is charging the trust, its management, and board members with negligence and breach of fiduciary duty.
Behringer Harvard REIT 1 has $4.4 billion in assets. The investor purchased 1275 shares between 2004 and 2008. The trust says the suit is without merit but the suit claims that Behringer Harvard tried to cover up poor performance during the real estate crisis by returning investors’ own funds to them, cloaked as dividends thrown off by the trust.
They also accuse the trust managers of pocketing what little cash flow
was thrown off. It states the trust will also not be able to make future distributions from its operations, the source that is normally used to pay dividends from a REIT.
It says the trust made false and misleading statements and recommended that investors not buy shares valued at $1.80 per share from external funds. Recent value of the trust was $4.64 per share and the original offering price was $10 per share.
If you have clients invested in this REIT--or other non-traded REITs--you may want to keep up with the development of this suit since it is the first step toward class action status.
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