NREA Southeast Portfolio Three DST: Securities Investigation  

Concerned about your investment in NREA Southeast Portfolio Three DST? 

The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended NREA Southeast Portfolio Three DST to investors. 

NREA is the platform built to manage real estate investments on behalf of NexPoint Advisors, L.P, according to its website. NREA reportedly manages a publicly-traded REIT,  NexPoint Residential Trust, Inc. (NYSE: NXRT) and the REIT subsidiaries to NexPoint Strategic Opportunities, a closed-end fund (NYSE: NHF), as well as DST 1031 Exchange and Reg-D offerings. The fund reportedly focuses on multifamily property investments.

According to SEC filings, NREA Southeast Portfolio Three DST, based in Dallas, Texas, filed a Form D to raise capital from investors in 2019. The total offering amount sold was purportedly $51,670,097, according to the Reg D filing. 

1031 DSTs – Complex Investment Products – NREA Southeast Portfolio Three DST

1031 Delaware Statutory Trusts, or 1031 DSTs, are an alternative for 1031 exchange investors seeking replacement properties, allegedly offering the potential for monthly income and diversification without any on-going landlord duties.  They are complex investment products.

While there is a time and place for most investments, DSTs are not appropriate for many investors as they come with a few disadvantages. 

For example, 1031 DSTs cannot raise new capital once the investment is made leaving investors holding the bag if expensive repairs are needed or other issues arise – like a drop in occupancy or rental income. The investors also have limited control over the property.  While the sponsor may welcome feedback from the investors in the DST, they don’t allow any actions to be taken by any one investor. 

Additionally, 1031 DSTs are illiquid, and it can often be difficult to find a buyer if an investor wants to sell their interest before the property is sold. 

Recovery of Investment Losses

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk investments to investors.  

Despite the risks of investing in DSTs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.  

Fortunately, FINRA does provide for an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim.  

Free Consultation with Securities Attorneys

If you are concerned about your investment in NREA Southeast Portfolio Three DST, please call the securities attorneys at The White Law Group at 888-637-5510 for a free consultation.  

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.  

For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://whitesecuritieslaw.com.