NP Sol Y Luna DST: Securities Investigation  

NP Sol Y Luna DST: Investigating Claims

Concerned about your investment in NP Sol Y Luna DST? 

 The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended NP Sol Y Luna DST to investors.

In November 2022, a Texas judge temporarily blocked Nelson Partners Student Housing from using $14 million in commissions received from the sale of Sol y Luna, a student housing complex in Tucson, Arizona. The ruling is part of ongoing litigation involving the company and investors in another property, Skyloft, a luxury student housing complex in Austin, Texas.

Investors allege that the firm’s owner, diverted funds improperly, and the court ordered that the $14 million be held in a Texas court registry until it’s determined if the money should have been paid into a $50 million restitution fund for Skyloft investors. This ruling adds to Nelson Partners’ mounting legal and financial troubles, including multiple lawsuits, loss of control over several properties, and numerous complaints about poor property maintenance. Additionally, Fannie Mae has sued reportedly sued Nelson to recover $12.6 million on a foreclosed property.

NP Sol Y Luna DST, sponsored by Nelson Partners Student Housing, filed a Form D to raise capital from investors in 2019. The total offering amount was purportedly $70,606,000, according to the Reg D filing. The sales commissions and fees were estimated at more than 9% of the total offering amount. 

The Risks of Investing in DSTs: NP Sol y Luna DST

Investing in DSTs

Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, allegedly offering the potential for monthly income and diversification without any on-going landlord duties.  

While there is a time and place for most investments, DSTs are not appropriate for many investors as they come with a few disadvantages.  For example, 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. The investors also have limited control over the property.  While the sponsor may welcome feedback from the investors in the DST, they don’t allow any actions to be taken by any one investor. 

Additionally, 1031 DSTs are illiquid, and it can often be difficult to find a buyer if an investor wants to sell their interest before the property is sold. 

Recovery of Investment Losses  

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk investments to investors.  

Despite the risks of investing in DSTs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.  

Fortunately, FINRA does provide an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim.  

Free Consultation with National Securities Attorneys

If you are concerned about your investment in NP Sol Y Luna 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 Seattle, Washington.