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Written by 5:23 pm Blog, Current Investigations

CNL Healthcare Properties Decrease in Net Asset Value

CNL Healthcare Properties Inc. – Investors may have claims

Are you concerned about your investment in CNL Healthcare Properties Inc.? If so, The White Law Group may be able to help by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

CNL Healthcare Properties is a non-traded real estate investment trust (REIT) that invests in the seniors housing and healthcare markets sponsored by CNL. The REIT launched in 2011 and made its first investment in early 2012.

On April 27, 2020, CNL Healthcare Properties, Inc. reported that as of April 24, 2020, there were seven coronavirus related resident fatalities across its 71 senior housing community properties, according to Fact Right, an alternative investment due diligence firm.  CNL Healthcare reportedly further noted that there were 34 confirmed cases among residents and staff members in 11 different properties located in 9 different states.  CNL Healthcare has approximately 7,000 residents and 5,000 community-level staff.

CNL Healthcare advised that the current market conditions would likely delay the timeline of its ability to execute on any transactions to provide liquidity to shareholders.

Net Asset Value Declines Again

The company has announced a revised Net Asset Value to $7.81 per share as of Dec. 31, 2019. The REIT’s previous estimated NAV per share, as of Dec. 31, 2018, was updated to $7.99 following a special distribution of $2.00 per share to shareholders in May 2019.  The NAV reportedly continues to decline. On March 19, 2019, CNL Healthcare announced an estimated net asset value (NAV) per share of $10.01 as of December 31, 2018.  This marks a decrease of 3.0% from the estimated NAV per share of $10.32 as of December 31, 2017.

As we previously told you, on August 26, 2019, Mackenzie Realty Capital, LLC extended an offer to purchase shares of common stock in the REIT at a purchase price equal to $5.25 per Share.

The original offering price was $10 per share. Aside from a special distribution made to investors in May, there reportedly have been no announced liquidity plans. The company reportedly “suspended its stock redemption plan indefinitely in July 2018 when it began to consider strategic alternatives,” according to Mackenzie’s offer letter.

Recovery of Investment Losses

The White Law Group continues to investigate the liability that brokerage firms may have for unsuitably recommending high risk investments like CNL Healthcare Properties Inc. to investors.

Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

The trouble with non-traded REITs, like CNL Healthcare Properties, is that they involve a high degree of risk. They are also typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.

Non-traded REITs are also known for high sales commissions and due diligence fees. Brokers have an enormous incentive to push these products to unsuspecting investors who do not fully understand the risks. Sometimes brokers misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.

If you are concerned about your investment in CNL Healthcare Properties or another CNL investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.



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