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American Healthcare REIT Inc. Liquidation

American Healthcare REIT Inc. Liquidation, featured by top securities fraud attorneys, The White Law Group

Investigating Securities Lawsuits: American Healthcare REIT 

The White Law Group is continuing to investigate securities claims involving American Healthcare REIT (formerly Griffin-American Healthcare REIT IV)   

American Healthcare REIT Inc., a healthcare real estate investment trust with approximately $4.2 billion real estate assets, invests in healthcare real estate assets, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities.    

American Healthcare REIT, Inc. (formerly known as Griffin-American Healthcare REIT IV, Inc.) announced on October 1, 2021, that it has completed its merger with Griffin-American Healthcare REIT III, Inc.  in a tax-free, stock-for-stock transaction that created a combined company with a gross investment value of approximately $4.2 billion in healthcare real estate assets, according to a press announcement.  (See American Healthcare REIT: Griffin-American Healthcare REIT III & IV Merger)   

Last May we reported some concerns for investors i.e., that distribution payments were cut in half — from an annualized rate of $0.60 per share to $0.30 per share beginning with the April 2020 distribution, which was to be paid on May 1, 2020. In addition, the share repurchase plan was suspended except for requests resulting from the death or qualifying disability of stockholders.    

Further, the recent tender offer price of American Healthcare REIT may suggest losses for investors.    

On December 20, 2022, Mackenize Capital Management extended a tender offer to purchase shares of the REIT for $19.80 per share. Although the actual present value is uncertain, the company has valued its shares at $37.16 per Share (as adjusted for the one-for-four reverse stock split). 

According to Mackenzie’s letter to shareholders, during the pandemic, Griffin-American Healthcare REIT III suspended its distributions and Griffin-American Healthcare REIT IV decreased its distributions about 33%. After the two entities merged, distributions were continued at the annualized rate used by Griffin-American Healthcare REIT IV immediately prior to the merger. “However, American Healthcare REIT reported that of the total distributions paid in 2021, 73.7% was considered a return of capital (you paid yourself),” according to Mackenzie. 

On September 16, 2022, the company filed a form S-11 with the Securities and Exchange Commission for a potential underwritten public offering to list its common stock on the New York Stock Exchange.   

How Does a Merger Affect Shareholders?    

Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.     

Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses.    

Is a Non-traded REIT a Suitable Investment for you?   

The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase high-risk non-traded REIT investments. Many investors are not fully aware of the problems and risks associated with these investments before purchasing them.   (See: Did your Financial Advisor Recommend Investing in Non-Traded REITs?)

Real estate investment trusts (REITs) are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors.   

Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling REITs – as high as 15%.  Brokers have an obligation to make investment recommendations that are consistent with their clients’ risk tolerance, net worth, investment objectives and experience in the market. Unfortunately, in many cases, the high sales commission may provide some brokers with enough incentive to make unsuitable investment recommendations.   

In addition to the high risks, non-traded REITs, like American Healthcare REIT often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.   

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 suffered losses in American Healthcare REIT and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.   

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

For more information on The White Law Group, visit www.whitesecuritieslaw.com.   

   

  

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