Written by The White Law Group• May 25, 2020• 7:46 pm• Blog, Current Investigations

Cove Capital DSTs, 1031 Exchange DST Investments

Cove Capital Investments, 1031 exchange DSTs

Concerned about your investment in a Cove Capital DST?

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending 1031 exchange DST investments to investors.

Cove Capital Investments creates 1031 exchange DST investments for accredited investors, according to its website. The principles of Cove Capital investments have reportedly “sponsored and cosponsored the syndication of over 1.3 million square feet of DST properties in the multifamily, net lease, industrial and office sectors as well as they seek to invest side by side their 1031 exchange investors in each of the Cove Capital offerings.”

According to SEC filings, the company filed a Form D to raise capital from investors in 2018 for the following Delaware Statutory Trusts:

Cove Debt Free Charlotte Pharmacy DST

Cove Debt Free Maplewood Industrial DST

Cove Debt Free Maryland Medical DST

Cove Debt Free Tacoma Data Center DST

Cove Debt Free Washington Pharmacy DST

Cove Debt Free Winston-Salem Distribution DST

While there may be tax advantages to investing in a DST, there are several downside risks.

Like other real estate, a DST 1031 is considered an illiquid asset. Though you may be receiving cash flow, you won’t have access to any proceeds until the asset is sold, and the program concludes, which could involve a span of 7-10 years or more. 1031 DSTs cannot raise new capital once the investment is made leaving investors holding the bag if expensive repairs are needed or other issues arise – like a drop in occupancy or rental income.

Further, investors in a DST often have no rights or say so in regards to property operations, and more importantly generally no control over when the property will be sold.

The White Law Group has represented a number of investors over the last few years in DSTs. Unfortunately, unscrupulous financial advisors will push these products to maximize their own commissions. The firm is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk DSTs to investors.

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. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.

If you are concerned about your?investment in a Cove Capital DST, please call the securities attorneys at The White Law Group at 888-637-5510 for a free consultation.

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

For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.