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Behringer Harvard REIT Presents Financial Challenge For Investors

The Behringer Harvard REIT and other unlisted real estate investment trusts like it are generating a myriad of questions by investors who say their broker/dealer misrepresented the products as safe investment vehicles that offered guaranteed dividends and little to no volatility.

Some broker/dealers and their financial reps may have been motivated by the large commissions – 15% is typical – tied to sales of unlisted REITs. Investors, however, may be unaware of these hefty fees. They also may not clearly understand the liquidity and valuation issues associated with unlisted REITs versus publicly traded REITs.

Unlisted REITs – also referred to as non-traded REITs – are registered with the Securities and Exchange Commission (SEC) but they don’t trade on national stock exchanges or over counter. Retail investors who invest in unlisted REITs purchase shares through a broker/dealer, with the idea that they will collect a steady dividend check from their investment.

It’s the fine print surrounding unlisted REITs that often comes back to haunt investors. Unlisted REITs can tie up investors’ money for years. In other words, an investor’s money essentially is “illiquid” until the end of the investing term. That means any shares in the REIT cannot be sold before that specified date.

In addition, it’s more and more common for unlisted REITs to deny redemption requests altogether if too many investors attempt to redeem their investments at once.

It’s also become increasingly common for some of biggest names in the non-listed REIT business to cut their dividends to investors. As reported by Investment News last fall, several of the most prominent non-traded REITs did just that, including the Behringer Harvard REIT I.

If you were ill-advised about the risks of investing in unlisted REITs like the Behringer Harvard REIT, contact our securities fraud team. We will evaluate your situation to determine if you have a viable claim for recovery.

8 thoughts on “Behringer Harvard REIT Presents Financial Challenge For Investors”

  1. Chris Says:

    I am curious to know whether I have a claim for misrepresentation in the purchase of the Behringer Harvard Opportunity REIT I. Please contact me.

  2. Tom Says:

    I was told by my Advisor that the bad thing about investing with banks was that they charged huge fees. Now I learn that investing in a REIT delutes my investment by 15% (the Advisor fee)when I buy it. I feel the Financial Advisors were lying to their clients to sell REIT’s.



  3. james Says:

    I was advised by my broker that Behringer was a safe
    investment and would return 8%.My monthly return was cut in half last year and I can not cash out.
    I was told he was given a new mercedes by Behringer,just before I was advised to purchase.

  4. Douglas Says:

    My advisor recommended B-H as a safe investment that would provide returns higher than CDs. He explained that there was a term to the investment, but never said the dividend might be cut or that the term might be extended. Since we had a definite schedule for needing the money out of the investment, in hindsight it doesn’t seem like it was an appropriate choice for us. On the plus side, any fees paid to the advisor by B-H were credited to my account with the advisor. I still believe this was characterized as a safe investment with a guaranteed dividend of 6% per year. The investment has not performed as advertised.

  5. Ron Says:

    I have read the above comments and am very upset that the latest cut in value and dividend is a complete joke.
    All of the rhetoric published by BH has said that shareholder value, preservation of our investment etc. has been and will be paramount. Yet they have invested continuously in this market place at our expense, or the investment of as opposed to the preservation of shareholder value. ie. devaluation of the investment and it’s return.
    What are our options?

  6. Dan Says:

    REIT investments are for a portion of a client’s investable assets where liquidity is not needed. Clients should have less than 10% of their investments in reit holdings. Advisors should not recommend to clients to invest in reits unless the criteria above is met. Most of the private reits will bounce back eventually which is why the client should be aware of the illiquidty. You have to understand that these were designed for long-term investors and I would rather have them cut dividends and reinvest at these depressed prices than allow people to get out and limit our return because they bought an investment that was unsuitable. Its a tough spot for Behringer, but you need to take issue with your advisors, not Behringer. They are trying to do what they stated were their intentions from the beginning.

  7. richard Says:

    My advisor recommended investing in Behringer Harvard. I inform her my mom left, me some money. Before she pass away in Auggust of 2007. I also inform my advisor that I do not have knowledge of investing. She stated thar I can have a 1200.- 1500. per month for retirement, with Behringer Harvard. She never inform me that its high risk. I am heart broken that, My investment seems worthless.

  8. Michael Says:

    The BH Reit was touted by my advisor as a safe investment yielding a steady return of 6% as part of an overall allocation of funds. First the dividend cut, then the freezing of assets that I told the advisor I needed to redeem in 2 years and now the value being reduced by approximately 60%.

    With regard to number 6 above, “most of the private reits will bounce back eventually”, I would have to say to that individual, “loan me $60,000 and I promise to maybe at some point pay you back some money”.

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