NB Gathering DST: Securities Investigation  

NB Gathering DST: Recovery of Investment Losses

The White Law Group is investigating potential claims on behalf of investors in NB Gathering DST, a Delaware Statutory Trust (DST) sponsored by Nelson Partners Student Housing. Many investors were sold this complex student housing investment as a suitable 1031 exchange replacement property. Unfortunately, DSTs like NB Gathering often carry significant risks, including lack of liquidity, limited investor control, and dependence on the sponsor’s financial health. Investors who suffered losses may be able to pursue recovery through FINRA arbitration claims against the broker-dealers that recommended these investments.

Background on NB Gathering DST

NB Gathering DST is a Class A student housing complex near Western Washington University, built in 2017. The sponsor, Nelson Partners, has faced multiple lawsuits, foreclosures, and bankruptcies tied to other student housing properties.

According to SEC filings, NB Gathering DST sought to raise more than $12 million from investors under Regulation D. Of that amount, over 10% reportedly went to sales commissions and fees—raising questions about whether brokers prioritized commissions over investors’ best interests.

NB Gathering DST and 1031 DST Investments

DSTs are often marketed to 1031 exchange investors as offering the potential for steady income and tax benefits without the burden of direct property management. However, these investments come with major drawbacks. Once capital is raised, DSTs generally cannot accept new funds—meaning investors may face financial losses if occupancy falls, rental income declines, or costly repairs arise.

Investors also have little to no control over the property. While sponsors may accept investor feedback, DST investors typically cannot influence management or operations.

Another concern is illiquidity. Investors may find it extremely difficult to sell their interest in a DST before the property itself is sold, making it unsuitable for those needing access to capital.

Broker Due Diligence and FINRA Arbitration

FINRA-registered brokerage firms are required to perform due diligence and ensure investment recommendations are suitable for each client. However, DSTs often generate high commissions for brokers, which can create conflicts of interest. If a financial advisor failed to adequately disclose the risks of NB Gathering DST, or recommended it to an investor for whom it was not suitable, the firm may be liable for losses through a FINRA arbitration claim.

Free Consultation with Securities Attorneys

If you invested in NB Gathering DST and are concerned about potential losses, contact The White Law Group at 888-637-5510 for a free consultation with a securities attorney.

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

Frequently Asked Questions (FAQs)

1. What are the risks of investing in NB Gathering DST?
NB Gathering DST, like other Delaware Statutory Trusts, carries risks such as illiquidity, lack of investor control, dependence on occupancy rates, and exposure to the financial troubles of the sponsor. If the property underperforms, investors may suffer significant losses.

2. Can I recover losses from my DST investment?
Yes. If your broker or financial advisor misrepresented the risks, failed to perform adequate due diligence, or recommended NB Gathering DST without considering your financial situation, you may be able to pursue recovery of losses through a FINRA arbitration claim.

3. Why would a broker recommend DST investments like NB Gathering?
Brokerage firms often earn high sales commissions—sometimes exceeding 10% of the offering amount—on DST investments. This financial incentive may lead some brokers to recommend unsuitable DSTs like NB Gathering despite their high risk and lack of liquidity.