Cottonwood Multifamily REIT I, Inc. Impacted by Covid-19

Cottonwood Multifamily REIT I Inc. Shareholders may have Claims

The White Law Group is investigating potential claims involving Cottonwood Multifamily REIT I Inc. and the liability that brokerage firms may have for improperly recommending high-risk non-traded REITs to investors.

Cottonwood Multifamily REIT I Inc. (Cottonwood)  invests in multifamily apartment communities located throughout the United States.

According to Cottonwood’s semi-annual report filed in August, like many other REITS, the company was reportedly impacted by the Covid-19 global pandemic.

The company noted that as a result of shutdowns, quarantines or actual viral health issues, some of the tenants at the multifamily apartment communities of the properties “owned by our joint ventures have experienced job loss or reduced income and have or may be unable to make their rental payments.”

During the six months ended June 30, 2020, these joint ventures have reportedly experienced a limited number of requests for rent deferrals. Further, these joint ventures have been and may be unable to evict tenants due to federal, state and/or local laws or regulations or lender requirements implemented as a result of the COVID-19 pandemic. 

The company also said it has seen “some impact on our profitability as a result of waiving late fees and the suspension of evictions at the multifamily apartment communities of the properties owned by our joint ventures.”  Market fluctuations may also affect the company’s ability to obtain necessary funds for operations from current lenders or new borrowings. The company warns that  the occurrence of any of these events “could materially and adversely affect our financial performance and our overall value.”

Recovery of Investment Losses

Non-traded REITS are considerably more complex than traditional investments and usually involve a high degree of risk. Unfortunately many investors were unaware of the risks and liquidity problems associated with non-traded REITs, when they were sold the investments. They also may come with high fees and commissions. 

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.

If a broker dealer fails to adequately disclose risks or make unsuitable investment recommendations, it can be held liable for investment losses.

If you are concerned about your investment in Cottonwood Multifamily REIT I Inc., the securities attorneys at The White Law Group may be able to help you.  Please call The White Law Group at 1-888-637-5510 for a free consultation with an experienced securities attorney.

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, TN.

For more information on The White Law Group and its representation of investors, please visit our website at www.whitesecuritieslaw.com