Options for Clients Who Lost Money Investing in Northstar Real Estate Income Trust (Northstar REIT) or Colony Credit Real Estate Inc. (CLNC)
Posted on Thursday, April 9th, 2020 at 12:12 pm
Erez Law is currently investigating brokers across the country who recommended their clients invest in Northstar Real Estate Income Trust (Northstar Healthcare REIT) or Colony Credit Real Estate Inc. (CLNC). It is alleged that brokers recommended their clients invest in Northstar REIT and Colony Credit Real Estate Inc. despite that these investments are not suitable for many investors, especially unsophisticated and conservative investors looking to preserve their capital or generate income.
Northstar Trust was a non-traded real estate investment trust (REIT) that invested in real estate debt. In January 2017, Northstar Trust merged into Colony Northstar Credit Real Estate, Inc., a publicly-traded company that changed its name to Colony Credit Real Estate, Inc. According to its website, “Colony Credit Real Estate, Inc. (NYSE: CLNC) is a commercial real estate credit REIT focused on originating, acquiring, financing and managing a diversified portfolio of commercial real estate debt and net lease real estate investments predominantly in the United States… With over 27 years of experience, the Colony Capital global platform (our external manager) has originated over $25 billion of commercial real estate credit assets in over 600 investments.”
Colony Credit Real Estate Inc. traded at $23 a share on September 21, 2018 and dropped as low as $2.81 on March 20, 2020. CLNC was trading at $13.01 a share on January 2, 2020 and currently trades at $3.82 a share, which is a 71% drop year to date, as of April 8, 2020.
It is alleged the brokers across the country recommended their clients invest in Colony Credit Real Estate Inc. and Northstar Real Estate Income Trust at the advice of their brokers, who generated exceptionally high commission for these recommendations.
It is alleged that brokers neglected to recommend an adequately diversified and suitable portfolio, which would have produced a significant positive return during the same period of time rather than losses in their clients’ accounts.
In October 2019, Erez Law filed a FINRA arbitration against Axa Advisors, LLC for losses due to unsuitable investments in Corporate Capital Trust, Inc. and Northstar Real Estate Income Trust II by broker Andrew Krakauer (CRD #1613159), a registered representative of Axa Advisors, LLC in Woodbury, New York since 1987. According to the claim filed by Erez Law, Krakauer represented that Corporate Capital Trust and Northstar Trust pay a consistent “guaranteed” 7% dividend or slightly higher if reinvested and are safer investments than investing in a stock portfolio. Corporate Capital Trust, Inc. and Northstar Trust were unsuitable, high risk and illiquid alternative investments that paid an exceptionally high commission. However, it is alleged that Krakauer told the clients that they were investing in high-quality real estate.
Unfortunately, brokers may not have explained to their investors the potential risks to investing in Northstar Real Estate Income Trust or Colony Credit Real Estate Inc. and now these investors have now suffered significant investment losses.
Brokers at brokerage firms across the country did not disclose the significant risks involved with investments in Northstar Real Estate Income Trust (Northstar REIT) or Colony Credit Real Estate Inc. (CLNC).
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.