Written by The White Law Group• May 12, 2023• 5:02 am• Blog, Current Investigations

Vinebrook Homes Trust, Inc. Securities Investigation

Vinebrook Homes Trust – Secondary Sales Price may Suggest Losses for Investors

The White Law Group is investigating securities claims involving the liability that broker dealers may have for improperly recommending non-traded REITs such as Vinebrook Homes Trust to investors.

NexPoint, based in Dallas, Texas, provides several types of real estate investment offerings, including publicly traded real estate investment trusts (REITs), Regulation D private placements, 1031 exchanges, closed-end funds, interval funds, and a business development company (BDC).

The company filed a form D to raise capital from investors for the offering Vinebrook Homes Trust Inc., a non-traded REIT. The total offering amount sold was $118,457,157.

According to Rialto, and secondary market for non-traded investments, shares of Vinebrook Homes Trust are currently listed to trade at $52 per share. The company’s current Net Asset Value (NAV) is $63.04.

Vinebrook Homes Trust and the Risks of Non-traded REITs

Many investors are not fully aware of the problems and risks associated with illiquid, high risk, non-traded REITs before purchasing them.

Non traded 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.

Liquidity Issues

Non-traded Real Estate Investment Trusts (REITs) can face several liquidity issues due to their unique characteristics and structure. They don’t trade on a public exchange like traditional stocks. As a result, there is no established secondary market for these investments, making it difficult for investors to sell their shares before the REIT’s liquidation event, which typically occurs after several years.

Non-traded REITs often have lock-up periods, during which investors are prohibited from selling their shares. These lock-up periods can extend for several years, further restricting liquidity and preventing investors from accessing their capital when needed.

Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling them– 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.

Due Diligence

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.

Hiring a Securities Attorney

If you are concerned about investment in Vinebrook Homes Trust, Inc. and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.

With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses. For more information, please visit our website, www.whitesecuritieslaw.com.