Lightstone Value Plus REIT II – Securities Investigation
If your financial advisor unsuitably recommended investing in Lightstone Value Plus REIT II, and you incurred losses, you may be able to recover your losses by filing a FINRA Arbitration claim.
Class Action Lawsuit Alleges Misleading Investors
A group of investors has reportedly filed a class-action lawsuit in New Jersey federal court against Lightstone Value Plus REIT II and two other non-listed REITs sponsored by affiliates of The Lightstone Group LLC, according to an article by the DI Wire today. The plaintiffs allege they were misled into approving charter amendments in late 2022 and early 2023 that blocked the liquidation of their investments and weakened shareholder protections.
The lawsuit reportedly targets Lightstone Value Plus REIT I, II, and III; their external advisers; and their 2022 directors. The amendments allegedly expanded indemnification for officers and directors, eliminated fiduciary duties and protections for shareholders, and removed liquidation deadlines, which plaintiffs claim were pushed through using allegedly incomplete and misleading proxy statements.
Investors reportedly allege that the changes favored one director’s financial interests, citing his subordinated equity investments worth up to $59.8 million, which would have been rendered worthless had the REITs liquidated as previously required. They also allege that the amendments have devalued their investments while benefiting the REITs’ directors, who purportedly collected millions in management fees in 2023.
The lawsuit reportedly seeks to rescind the amendments, restore shareholder protections, and award damages for breach of fiduciary duty and contract. Plaintiffs also demand class action certification and equitable relief.
Lightstone Value Plus REIT II, Inc. Secondary Sales Price
Lightstone REIT suspended its share redemption program in March 2020, and reopened it in May 2021 with contingencies, i.e. stockholder hardship including death or disability. These redemptions were reportedly limited to 0.5% of outstanding shares each year.
According to Lodas Markets, a secondary market for non-traded investments, Lightstone Value Plus REIT II was recently sold for $4.00 per share. The original offering price was $10 per share, and the current Net Asset Value, is $9.45 per share, according to filings with the SEC.
Non-traded REITs – High Risk Investments
The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling complex investment products like Lightstone Value Plus REIT II to investors.
Although the selling points of non-traded REITs can be enticing, investors should balance these selling points against the numerous complexities and risks these investments carry.
In some cases, the investment may be heavily subsidized by borrowed funds and include a return of investor principal. This is very different from the dividends investors receive from large corporations that trade on national exchanges, which are typically derived solely from earnings. The other problem with non-traded REITs, of course, is the lack of liquidity. Investors looking to sell non-traded REITs often have difficulty finding a buyer, and can suffer significant losses on the sale.
Unfortunately, high commissions could be a motivating factor for unscrupulous financial advisors to sell a non-traded REIT regardless of whether the investment is in line with the client’s investment objectives and profile. Moreover, the total commissions and expenses make it difficult for the REIT to perform in line with the market.
Broker Due Diligence
Your financial advisor has a responsibility to perform due diligence on any investment before recommending it to you. If your advisor unsuitably recommended a non-traded REIT and you lost money, the securities attorneys at The White Law Group may be able to help you. You may be able to recover losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.
If you have suffered losses investing in Lighstone Value Plus REIT II, please contact the offices of The White Law Group at 1-888-637-5510.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.
FINRA provides an arbitration forum for investors to resolve disputes. The White Law Group represents investors in FINRA arbitration claims throughout the country. Visit the firm’s homepage to learn more about the firm’s representation of investors.
