JER Investors Trust Inc.: Update on Chapter 11 Bankruptcy
The White Law Group continues to investigate broker dealers who may have improperly recommended JER Investors Trust to its customers.
Bankruptcy Filing and Financial Overview
JER Investors Trust Inc. reportedly filed for Chapter 11 bankruptcy protection on December 29, 2023, in the U.S. Bankruptcy Court for the District of Delaware (Case No. 1:23-bk-12109). The company reported liabilities exceeding $100 million against assets under $50 million. Major creditors include The Bank of New York Mellon Trust Co., owed approximately $93.9 million, and C-III Capital Partners, a significant shareholder with an 8.4% stake, owed nearly $20 million.
Investment Losses and Financial Maneuvers
The bankruptcy filing follows JER’s substantial investment losses, totaling nearly $1.25 billion in mortgage-backed securities. In an effort to mitigate its financial challenges, JER secured approximately $23.5 million from recent investments and its share of a $120 million judgment against a suburban Chicago shopping mall operator. This capital is intended to partially repay its substantial debt. ?
Chapter 11 Plan Confirmed and Effective
JER Investors Trust Inc.’s Chapter 11 reorganization plan was confirmed by a Delaware bankruptcy judge and became effective on March 28, 2025. This marks the company’s official emergence from bankruptcy, following its initial filing on December 29, 2023.
The Risks of Investing in Mortgage REITs
Mortgage REITs pose higher risks compared to other types of REITs due to specific factors:
Interest Rate Risks: Changes in interest rates impact all REITs but have a more significant effect on mortgage REITs. Fluctuations in short- and long-term rates can alter net interest margins by elevating funding costs and reducing interest income. Such shifts can also impact the REIT’s net asset value and share price.
Prepayment Risk: Mortgage borrowers have the option to refinance or sell their properties, compelling mortgage REITs to reinvest repaid loan amounts in the prevailing, potentially lower interest rate market compared to the existing mortgage rates.
Credit Risks: Commercial Mortgage REITs face credit risks if borrowers default on their loans.
Rollover Risk: Residential mortgage REITs typically hold long-term mortgages and securities. As these loans mature, they need to secure funding at favorable rates to roll over these loans, posing potential challenges.
Investor Lawsuit Investigations and Legal Actions
In light of the bankruptcy, our firm is investigating potential claims on behalf of investors who may have been misled regarding the risks and liquidity issues associated with JER’s REIT offerings. Investors who suffered losses may be entitled to financial recovery through FINRA arbitration.
If you have suffered investment losses in a JER Investors Trust, please call the securities attorneys of 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.
