National investment fraud lawyers KlaymanToskes will continue its investigation of brokerage firms and financial advisors that recommended unsuitable, non-traded REITs such as CNL Healthcare Properties to their customers. The announcement follows CNL Healthcare’s rejection of a third-party tender offer from Comrit Investments 1 to purchase 8.8 million shares at less than half of investors’ initial purchase price. Financial professionals who recommended CNL Healthcare may be responsible for any investment losses incurred.
Investors who suffered losses in CNL Healthcare Properties or any other non-traded REIT with their broker/financial advisor are encouraged to contact attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
CNL Healthcare Properties is a non-traded Real Estate Investment Trust (“REIT”) that “seeks to provide income and growth” according to its website. In June 2018, CNL filed a Form 8-K with the SEC, in which it suspended the company’s Distribution Reinvestment Program (“DRP”) and Stock Redemption Plan (“SRP”).
As a result of CNL’s redemption suspension, Comrit Investments 1 made several tender offers over multiple years to buy shares of CNL Healthcare Properties. Comrit and its affiliates currently own 2.7 million shares of CNL Healthcare common stock, or approximately 1.6% of the outstanding shares as of November 11, 2021.
In February 2021, CNL announced its tender offer from Comrit Investments 1 to purchase up to 8,800,000 shares of common stock at a purchase price equal to $4.64 per Share. In March, Comrit Investments lowered its tender offer to $4.36 per share. On March 8, 2023, CNL’s Board of Directors unanimously approved $6.92 per share as the Company’s estimated NAV as of December 31, 2022. CNL’s previous estimated NAV was $7.37 per share as of Dec. 31, 2021. According to the company, the decline was due to “reduced occupancy levels at the Company’s properties, as well as disruptions in the financial markets or deteriorating economic conditions that differ from what the Company anticipated at the time.”
On March 21st, 2023, CNL Healthcare filed a Solicitation/Recommendation Statement in which it declared that its Board of Directors recommended that the company’s stockholders reject the tender offer from Comrit Investments 1. CNL’s board stated that it “recognizes that due to the suspension of the Company’s stock redemption plan, the lack of a trading market for the Company’s shares and the uncertainty surrounding inflation, interest rates and the residual impacts of the COVID-19 pandemic and its effects on the Company and its industry sector and the economy as a whole, some stockholders may decide to accept the Comrit Offer.”
The Company also stated that it “cannot provide assurances with respect to future strategic transactions, future distributions, the future value of its shares” or “to future liquidity for stockholders.” CNL Healthcare allegedly “remains actively engaged in pursuing strategic alternatives” but “does not believe that market conditions will support a liquidating transaction prior to the end of 2023.”
Many investors are not aware of the risks and liquidity problems associated with non-traded REITs and other alternative investments. REITs are considerably more complex than traditional investments such as stocks, bonds, and mutual funds, and involve a high degree of risk due to being illiquid.
Brokerage firms and brokers/financial advisors who recommended CNL Healthcare Properties Inc. may be liable for any losses incurred by investors. Financial advisors and their firms are responsible for providing suitable investment advice and must disclose all the risks of any investment. In the event of a misrepresentation or omission of material facts resulting in losses suffered by the investor, the brokerage firm may be held liable in a FINRA arbitration claim.
Investors that suffered significant losses in CNL Healthcare Properties, at the hands of their brokerage firm and/or financial advisor should contact attorney Lawrence L. Klayman, Esq., at 888-997-9956, or lklayman@klaymantoskes.com to discuss their recovery options.
Consultations are free and every case is taken on a contingency basis, meaning we do not collect a fee unless we are able to obtain a financial recovery for you.
CNL Healthcare Properties is one of many REITs that have recently suspended/limited redemptions, liquidated and/or filed for bankruptcy. See our related blogs on similar REITs:
“Notice To KBS/Pacific Oak REIT Investors: KlaymanToskes Offers Recovery Options”
“SEC Orders Provisional Suspension Of Diversyfund Growth REIT II’s Regulation A Exemption”
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956