CAI Investments Lake Forest Global HQ DST: Securities Investigation

CAI Investments, LLC, a real estate development and property management company, filed a form D for a Delaware statutory trust (DST) offering, CAI Investments Lake Forest Global HQ DST, raising nearly $22.8 million from accredited investors.

The offering reportedly involves a Class A office building in Lake Forest, Illinois, which serves as the global headquarters of Pactiv Evergreen, LLC, a major packaging and food service product manufacturer.

According to SEC filings, the company filed a Form D to raise capital from investors in 2018.

DSTs: Suitable for you?

Delaware Statutory Trusts, or 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.

According to its brochure, an investment in the CAI Investments Lake Forest Global HQ DST interests involves substantial risks including, without limitation:

Concentration Risk: The investment is not diversified, focusing solely on a single commercial property in Illinois.

Dependence on Master Tenant: Investors must fully rely on the Master Tenant to manage, lease, and maintain the property, as well as to pay rent. Any issues with the Master Tenant’s performance could negatively impact the investment.

Lease Risks: If the tenant does not renew, extends, terminates, or defaults on the lease, it could lead to significant revenue loss, adversely affecting the property’s operating results. This could also jeopardize the investors’ ability to benefit from Section 1031 tax deferral.

Lack of Control: Investors have no voting rights regarding the management or operation of the Trust or decisions related to selling the property.

Conflicts of Interest: There are potential conflicts of interest among the Trust, the Master Tenant, the Sponsor, the Signatory Trustee, and their affiliates, which could influence decisions that may not align with investors’ best interests.

Illiquidity: The investment is illiquid, meaning it may be difficult to sell or exit the investment quickly.

Regulation Best Interest and Broker Due Diligence

Under the “Regulation best interest” standard, broker-dealers are obligated to perform comprehensive due diligence when evaluating any investment.  This evaluation aims to empower investors to make well-informed decisions aligned with their best interests.

If your financial advisor fails to perform due diligence on an investment before recommending it to you, they could be held liable for investment losses.

If your advisor unsuitably recommended a 1031 DST offering and you lost money, the securities attorneys at The White Law Group may be able to help you. You may be able to recover losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

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 with a Securities Attorney

FINRA provides an arbitration forum for investors to resolve disputes. The White Law Group represents investors in FINRA arbitration claims throughout the country. Visit the firm’s homepage to learn more about the firm’s representation of investors.

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

If you are concerned about your investment in CAI Investments Lake Forest Global HQ DST, please call the securities attorneys at The White Law Group at 888-637-5510 for a free consultation.