Lightstone Changes Name, Limits Redemptions to “Death or Hardship”
The White Law Group continues to investigate FINRA arbitration claims involving non-traded REITs such as Lightstone Real Estate Income Trust. On September 15, 2021, Lightstone Value Plus REIT IV, Inc. changed its name from “Lightstone Real Estate Income Trust, Inc” to “Lightstone Value Plus REIT IV, Inc.”
Lightstone Real Estate Income Trust, a publicly listed, non-traded REIT, reportedly focuses on investing in debt obligations that finance development or redevelopment opportunities, originate mezzanine loans or preferred equity investments in development projects, and participates in loan portfolios with third parties.
According to a current listing on CTT Auctions, a secondary sales website, shares of the REIT are listed for sale for just $3.40 per share. Shares were originally sold for $10 per share. According to filings on March 18, 2022, the board of directors approved an estimated value per share of $8.58 per share based on assets less the estimated value of liabilities divided by the number of shares outstanding.
Liquidity is often problematic when investing in non-traded REITs. While the company reopened the share repurchase program effective May 10, 2021, it was only in connection with a stockholder’s death or hardship and set the price for all such purchases to 100% of the NAV per Share . The Company notes it will not redeem in excess of 0.5% of the number of shares outstanding as of the end of the preceding year for either death or hardship redemptions, respectively.
Unfortunately for investors it appears that many financial advisors/brokerage firms that sold non-traded REITs such as Lightstone Real Estate Income Trust, may have understated or misrepresented the risks and liquidity problems.
According to its website, Lightstone has offered investors “the opportunity to invest in a diversified portfolio of real estate through its various public non-traded REIT offerings.”
On March 25, 2020, the Lightstone’s Board of Directors determined to suspend regular monthly distributions for months ending after March 2020, according to filings with the SEC, citing market volatility due to the Coronavirus pandemic.
The Trouble with Non-traded REITs
The trouble with non-traded real estate investment trusts (REITs) is that they are inherently risky. Compared to traditional investments, such as stocks, bonds and mutual funds, non-traded REITs are more complex and are better suited for investors that can afford to risk the total losses of their investment.
Brokers often earn extremely high sales commission selling non-traded REITs, sometimes as high as 15%. Unfortunately, the high sales commissions associated with non-traded REITs often provide some broker dealers with enough incentive to overlook suitability requirements.
Brokers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor and are in line with the clients risk tolerance, age, net worth, and investment experience.
If a brokerage firm makes unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment, they may be liable for investment losses through FINRA arbitration.
Potential Lawsuits to recover Financial Losses
To determine whether you may be able to recover investment losses incurred as a result of your purchase Lightstone Value Plus REIT IV., please contact The White Law Group at (888) 637-5510 for a free consultation.
For more information on the firm’s investigation, please see:
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 Seattle, Washington. For more information on the firm, visit www.WhiteSecuritiesLaw.com.
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