Hospitality Investors Trust REIT Investigation

Did you lose money by following a broker’s recommendation to invest in Hospitality Investors Trust REIT? If so, you may be able to participate in a lawsuit. 

We’re investigating whether brokers or financial advisors recommended this REIT to their clients, even if it was not suitable for them.

A REIT is a real estate investment trust, that is, a group that owns income-producing real estate. REITs collect money from investors, then use it to buy properties such as hotels, shopping centers, apartment buildings, or office buildings. 

Investors in REITs hope to profit from regular cash distributions from the REIT’s income.

Recent Events

Hospitality Investors Trust REIT began by selling its shares at $25, but the price has dramatically decreased in value. The REIT stopped all distributions in 2017. Its self-tender offer (that is, an offer to buy its own shares) set a much lower price for shares.

In May 2021, with $1.3 billion in debt, the REIT declared bankruptcy. The bankruptcy plan, issued in June 2021, worsens the situation for investors, with only a potential for payouts, limited to $6 per share and not transferable. Investors are unlikely to recover much of the money they invested.

A Risky Investment

Hospitality Investors Trust is a publicly-registered, non-traded REIT, formerly called American Realty Capital Hospitality Trust (ARC Hospitality Trust). 

It was a risky investment from the beginning, because it did not have assets or own real estate properties. In fact, at first, it could not even point to the properties it intended to acquire or invest in, which means that brokers, advisors, and investors would have difficulty evaluating the REIT.

Non-traded REITs are risky investments, but they may offer high commissions, so that brokers may have an incentive to get clients to buy shares.

Did Your Broker Recommend It?

Brokers and financial advisors have a duty to the people they serve to make only suitable investment recommendations. An investment’s suitability for a particular client is based on a number of considerations, including the client’s age, investment experience, risk tolerance, need for liquidity, and other factors.

A broker or financial advisor who recommends unsuitable investments, or who does not take these factors into consideration, may bear some liability for losses. 

Investigation for a Potential Class Action

If your broker suggested Hospitality Investors Trust REIT, and it was not an appropriate investment for you, you may be eligible to file a class action. Fill out the form on this page and let us know what your experience was.

Article Type: Investigation
Topic: Investments
No case events.
Tags: Investment Losses, Securities, Suitability Violations