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Non-Traded REITs in Regulatory Hotseat

A number of non-traded real estate investment trusts (REITs) continue to be a losing investment for investors. Most recently, it’s been Inland Western Real Estate Trust to cause many investors to lose sleep.

In early April 2012, Inland Western went public at $8 a share. For investors who bought Inland Western at its original share price of $10 a decade ago, their investment is now worth approximately $2.90.

The dismal public debut of Inland Western (now renamed Retail Properties of America) doesn’t bode well for future IPOs of non-traded REITs.  As a retail investment, non-traded REITs have taken a beating in the financial media over the past year, with regulators – including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) – launching repeated inquiries into the broker/dealers who sold the investments to investors.

In addition, FINRA has issued several investor notices on non-traded REITs. In those notices, FINRA highlights a number of concerns: the products’ limited valuation transparency, illiquidity, potential conflicts of interest, risks to an investor’s principal, and the high fees and commission they command.

If you’ve suffered significant losses in non-traded REITs, including Inland Western/Retail Properties of America, Inland American or Behringer Harvard REIT I, contact us to tell your story.

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