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Written by 4:21 pm Blog, Securities Fraud Articles

Recovery of Cornerstone Healthcare Plus REIT (CHP REIT) Investment Losses

Have you suffered losses in Cornerstone Healthcare Plus REIT (CHP REIT)? If you have, The White Law Group may be able to help you.

The White Law Group is currently investigating the sale of the REITs and Funds under the umbrella of Cornerstone Ventures Inc.’s Cornerstone Real Estate Funds. One of those investments is the Cornerstone Healthcare Plus REIT or CHP REIT. We are reviewing how investors were sold this investment and how it was represented to them in order to determine how best to pursue recovery of their losses.

Over the past months we have accumulated information and documents that paint an uncertain future for the investment and its investors.

According to documents distributed by Cornerstone Real Estate Funds, “On April 29, 2011, CHP REIT stockholders were informed that the [CHP REIT Board of Directors (the Committee)] was not satisfied by the rate at which funds were being raised for the REIT.” In light of this the Committee, “considered various strategic alternatives for the REIT to enhance stockholder value.” Additionally, “In consideration of the uncertainty associated with these developments” the Committee decided to suspend the public offering, the distribution reinvestment plan, and the stock repurchase plan.

For investors these April events are troubling because without being able to sell their positions in the Cornerstone Healthcare Plus REIT back to Cornerstone, they are likely unable to get out from under their investment  without taking a large loss by selling on a secondary market.

Additionally, according to Cornerstone documents, in August the CHP REIT Board of Directors, in a stockholder letter, indicated that “the financial condition of the REIT is strong…” However, they also indicated that restructuring of the fund and its relationship to the Advisor and Sub-Advisor would be necessary. As the fund’s directors decided what is best for the fund they “determined to maintain a conservative approach with respect to the dividend level and reduce the annualized distribution rate from 7.5% to 2.5% to be paid to CHP REIT stockholders on a quarterly basis rather than a monthly basis effective with the third quarter 2011.

For investors these recent events appear to mean that not only don’t the investors have the ability to sell their principle investment, but the dividends of the investment have also been drastically decreased. Investors have been left in a difficult position.

With this type of investment, illiquidity is always a possibility. However, for some investors, especially those who are retired or need a consistent income stream to live off of, being stuck in an investment without getting significant dividend returns can be devastating. These are risks commonly associated with this type of investment and if you are a retired or income needy investor, this investment recommendation may have been unsuitable for you.  In that case you may be able to recover your investment through FINRA arbitration by pursuing claims against the brokerage firm that recommended the investment to you.

Brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives.

If you are concerned about your investment in the Cornerstone Healthcare Plus REIT (CHP REIT), or another Cornerstone Real Estate Funds product and would like to speak to a securities attorney, please call our Chicago office at 312-238-9650.

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 Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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