Written by The White Law Group• January 20, 2024• 8:20 pm• Investment Loss Recovery

Brookfield Real Estate Income Trust: Investigating Claims

Securities Investigation – Brookfield Real Estate Income Trust

Are you concerned about your investment in Brookfield Real Estate Income Trust? If so, the securities attorneys at The White Law Group may be able to help you.

According to its website, Brookfield Real Estate Income Trust is a public, non-traded, “perpetual life” real estate investment trust (REIT).

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Non-Traded REITs Overvalued?

In a report last May, Investment News raised concerns about potential overvaluation in non-traded REITs, especially those specializing in commercial real estate, suggesting an overvaluation of up to 30%. The ongoing trend of remote work in many American businesses post-pandemic, alongside rising interest rates, has adversely affected commercial real estate.

According to Investment News, the Dow Jones U.S. Real Estate Index witnessed a significant decline of 15.7% over the past year, contrasting with a marginal increase of just over one percentage point in the S&P 500 index during the same period.

Furthermore, a recent report from real estate data firm CoStar Group Inc. highlighted a record-high U.S. office vacancy rate, reaching 12.9% in the first quarter, surpassing levels observed during the 2008 financial crisis. These developments raise concerns for investors in non-traded REITs due to their considerably limited share redemption programs, which exacerbate the inherent “liquidity issue” associated with such products.

Risk Factors of Investing in Brookfield Real Estate Income Trust

According to its website, investing in shares of common stock of Brookfield Real Estate Income Trust Inc. carries a high level of risk and should only be undertaken if investors can afford to lose their entire investment. Some key risks associated with investing in Brookfield REIT include the following among others:

Limited Operating History: Brookfield REIT has a limited operating history, which may not be reliable due to changes resulting from adviser transition and adjustments to its business structure. There is no guarantee of achieving investment objectives.

Limited Liquidity: There is no public trading market for Brookfield REIT’s common stock and repurchase by the company is likely the only way to dispose of shares. Repurchases are subject to availability and may be modified or suspended by the board of directors.

Distribution Uncertainty: Brookfield REIT may not guarantee distributions, and if paid, they may be funded from sources other than operational cash flow, especially in the early stages of the offering.

Valuation Uncertainty: Shares’ purchase and repurchase prices are based on net asset value (NAV), which may not accurately reflect liquidation values. Property appraisals are subjective, further affecting NAV accuracy.

Borrowing Risks: Principal and interest payments on borrowings reduce funds available for distribution or investment, increasing loss and economic exposure risks. Commercial Real Estate Risks: Investing in commercial real estate assets involves various risks, including tenant payment issues, interest rate fluctuations, tenant turnover, and changes in market supply and demand.

Commercial Real Estate Risks: Investing in commercial real estate assets involves various risks, including tenant payment issues, interest rate fluctuations, tenant turnover, and changes in market supply and demand.

Complex Investment Products – Brookfield Real Estate Income Trust

The trouble with non-traded REITs is that they are complex and inherently risky products. Lack of liquidity is often problematic for many investors. Investors looking to sell often have difficulty finding a buyer, and when they do, can suffer significant losses on the sale. To learn more, see: Non-traded REITs “Liquidity Issue”

Broker Due Diligence

Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.

Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration.

Free Consultation

If you are concerned about your investment in Brookfield Real Estate IncomeTrust, the securities attorneys at The White Law Group may be able to help. Please call the offices at 888-637-5510 for a free consultation with a securities attorney.

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 whitesecuritieslaw.com.