Concerned about your investment in CAI Tempe Hotel Partners, LLC?
Are you concerned about your investment in CAI Tempe Hotel Partners, LLC? If so, The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
Auction Delayed
According to the Phoenix Business Journal on May 8, 2024, CAI Tempe Hotel Partners, LLC is still looking for a purchaser for the Westin Tempe Hotel. The trustee auction for the hotel, initially planned for April 25, 2024, has faced several postponements as the owner looks for a buyer for the property.
The article added that the auction slated for May 10 has been postponed again. The hotel is currently being advertised for sale at $115 million, operating under a 25-year sale-leaseback triple net lease agreement with its current owner, CAI Tempe Hotel Partners, LLC. Marketed conditions encompass an annual base rent of $7 million, with annual rent escalations of 2%, according to FactRight.
Foreclosure Proceedings – Westin Tempe Hotel
The Westin Tempe Hotel, with 290 rooms, was built and commenced operations in October 2021. Reports from ConnectCRE indicate that a $5 million loan payment was not made in December 2023. The lender that provided the $86.5 million construction loan, has reportedly initiated foreclosure proceedings on the hotel.
A foreclosure auction was set after the outstanding payments weren’t resolved as the hotel was unable to secure refinancing, according to FactRight. CAI Investments LLC, based in Las Vegas, reportedly developed the hotel. According to Fact Right, confirmation of the notice of trustee sale filing was obtained from the Maricopa County Recorder in February.
CAI Investments, LLC, a property manager/developer and private placement sponsor, reportedly filed a form D to raise capital from investors in 2017 for the offering CAI Tempe Hotel Partners, LLC. The total offering amount sold was purportedly $3,556,925 and the dealer fees and sales commissions were estimated at 10% of the total offering amount sold.
The Risks of Reg D Private Placement Investments- CAI Tempe Hotel Partners, LLC
Reg D private placements are typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional “due diligence fees” that can range from 1-3%.
The trouble with Reg D private placements, like CAI Tempe Hotel Partners, LLC, is that they involve a high degree of risk and are typically sold as unregistered securities. These investments lack the same regulatory oversight as more traditional investment products like stocks or bonds.
The White Law Group is investigating the liability that brokerage firms may have for improperly selling CAI Tempe Hotel Partners, LLC to investors.
Broker Due Diligence
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
Unfortunately, sometimes financial advisors may misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.
Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.
Class Action vs. Individual FINRA Arbitration Lawsuit
People often wonder whether a large class action lawsuit is a better litigation option for them than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
Free Consultation
To determine whether you may be able to recover investment losses incurred as a result of your purchase of CAI Tempe Hotel Partners, LLC or another private placement investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. The firm represents investors throughout the country in claims against their brokerage firm.
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