Written by The White Law Group• March 11, 2025• 12:29 pm• Investment Loss Recovery

Block 216 QOF Funds (Ritz Carlton): Securities Investigation

Block 216 Qualified Opportunity Fund (Ritz Carlton) Lawsuits Update

Have you suffered investment losses in Block 216 QOF or Block 216 QOF II? The White Law Group is investigating potential FINRA arbitration lawsuits involving Baker Tilly Capital and the liability it may have for improperly recommending Block 216 QOF II LLC and Block 216 QOF LLC to investors.

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Block 216 QOF II, LLC, based in Portland, Oregon, is purportedly a “Qualified Opportunity Fund.” Block 216 QOF II LLC, reportedly filed a form D to raise capital from investors in 2021, according to SEC filings. The total offering amount was purportedly $20,500,000. The sales compensation recipient was reportedly Baker Tilly Capital.

The property itself ,”Block 216″, has ground-floor retail, five floors of office space, a Ritz-Carlton Hotel and Ritz-Carlton Residences. According to reports, Ready Capital acquired the Block 216 loan in March 2022, when it bought Mosaic Real Estate Credit LLC, the building’s original construction lender. Reports also indicate that like so many downtown Portland towers, Block 216 has struggled to land office tenants and that just 23% of the office space is leased.

Update: Lender Files Lawsuit over Block 216 Transfer Deal

According to the Oregonian on March 25th, a lender who helped finance the Block 216 tower, the Ritz-Carlton hotel, alleges it’s being cut out of a deal to avoid a foreclosure on the property. The lawsuit alleges that the transfer was conducted improperly, potentially to avoid financial obligations. Block 216 is a significant mixed-use development in downtown Portland, featuring luxury condominiums, office spaces, and the Ritz-Carlton hotel. The outcome of this lawsuit could have substantial implications for the future of the property and its stakeholders.

Block 216 QOF Funds: Possible Foreclosure

As previously reported, Ready Capital, again, the lender to Block 216, sounded an ominous note about the property in a recent earnings report. Ready Capital signaled that the best strategy for its $503 million construction loan may be to take possession of the property rather then refinance the construction loan in to a bridge loan. According to various reports this could be the first step in initiating a foreclosure on the property. This is obviously a bad sign for the underlying investors in Block 216 QOF since if there is not enough equity in the property a foreclosure may extinguish their interest.

Reports also indicate that the hotel is underperforming too. Reportedly its average revenue per available room was dramatically below the average Ritz-Carlton hotel. This may further lead Ready Capital to move to foreclose rather then work with the lender.

It is further reported that the developer BPM Real Estate Group was working on a solution with lenders but given the financial realities it is unclear if foreclosure can be avoided.

The general contractor for the Block 216 tower, Howard S. Wright, filed a $26 million lien against the property last year, further complicating the financial picture and the rights of investors in Block 216 QOF.

REG D Private Placements: High Risk Investments

Block 216 QOF I and II were both funded initially by Reg D offerings, likely sold by financial advisors to accredited investors. Regulation D, an SEC regulation, allows small to midsize companies an opportunity to raise capital from investors with less expense and reporting requirements than traditional means, making it quite popular.

Often these private placement investments are touted for their income potential and for being “non-correlated” to the stock market. Too often the financial advisor or broker ignores and/or fails to disclose the risks involved in these investments.

Did your Broker Unsuitably Recommend Block 216 (Ritz Carlton)?

Block 216 QOF I and II also apparently qualified as Opportunity Zone investments. Opportunity Zones are economically distressed communities where new investments may be eligible for preferential tax treatment under the Tax Cuts and Jobs Act of 2017. Investments in Qualified Opportunity Funds (QOF) can offer tax deferral and other tax benefits to investors similar to those offered by 1031 exchanges and can appeal to investors seeking deferral of taxes owed on long term capital gains.

However, private placement investments such as Block 216 QOF LLC and Block 216 QOF II LLC , are typically illiquid investments. There are often legal or contractual restrictions on your ability to liquidate your investment and even if sale of the offering is permitted there may be no buyers. You may need to hold these securities for an indefinite period of time.

Unfortunately, companies that issue unlisted securities may provide little or no transparency into their financial condition.

While some private placement investments may make periodic distributions, some may not make any at all. Another problem is the high fees and commissions that brokers and financial advisors may receive for the sale of a private placement investment– sometimes close to 10% of the client’s total investment.

Baker Tilly Capital: Broker Due Diligence

Under the “Regulation best interest” standard, broker-dealers are obligated to perform due diligence when evaluating any investment. If Baker Tilly Capital failed to perform adequate due diligence on a Block 216 QOF Fund before recommending it to you, they could be held liable for investment losses.

If your advisor unsuitably recommended a private placement investment and you lost money, the securities attorneys at The White Law Group may be able to help you by filing a FINRA lawsuit. FINRA Arbitration is a great option for many retail investors.

Class Action Lawsuit vs. Individual FINRA Arbitration Lawsuit

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration lawsuit. 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 action lawsuits as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Block 216 QOF II (Ritz Carlton) – Lawsuits

If you are concerned about your investment losses in Block 216 QOF Funds (Ritz Carlton) you may have recovery options. If you want to learn more about filing a FINRA lawsuit, please contact the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.

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

Last modified: March 28, 2025