We Represent Investors Who Suffered Losses from Risky Real Estate Investments.

At Goodman & Nekvasil, we have years of experience in representing investors who have suffered losses from risky real estate investments. For many investors who have lost their life savings, brokers breached their fiduciary duty by overconcentrating their clients’ assets in highly risky real estate investments that were unsuitable for the investors. Many high-risk real estate investments involve unusually high commissions, which encourage brokers to sell these securities even when they are inappropriate for clients. Investors can suffer devastating losses as a result of investments in the wrong real estate properties, and we have helped investors recover these losses.

What is a Real Estate Investment Trust?

Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

What Types of REITs are There?

Many REITs are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly traded REITs. Others may be registered with the SEC but are not publicly traded. These are known as non- traded REITs (also known as non-exchange traded REITs). This is one of the most important distinctions among the various kinds of REITs. Before investing in a REIT, you should understand whether or not it is publicly traded, and how this could affect the benefits and risks to you. When investing in REITs, your broker is required to disclose the risks associated with your investment. Below are potential risks to be aware of when investing in REITs:

The Risks Associated with Non-Traded REITs

Because they do not trade on a stock exchange, non-traded REITs involve special risks:

• Lack of Liquidity: Non-traded REITs are illiquid investments. They generally cannot be sold readily on the open market. If you need to sell an asset to raise money quickly, you may not be able to do so with shares of a non-traded REIT.

• Share Value Transparency: While the market price of a publicly traded REIT is readily accessible, it can be difficult to determine the value of a share of a non-traded REIT. Non-traded REITs typically do not provide an estimate of their value per share until 18 months after their offering closes. This may be years after you have made your investment. As a result, for a significant time period you may be unable to assess the value of your non-traded REIT investment and its volatility.

• Distributions May Be Paid from Offering Proceeds and Borrowings: Investors may be attracted to non-traded REITs by their relatively high dividend yields compared to those of publicly traded REITs. Unlike publicly traded REITs, however, non-traded REITs frequently pay distributions in excess of their funds from operations. To do so, they may use offering proceeds and borrowings. This practice, which is typically not used by publicly traded REITs, reduces the value of the shares and the cash available to the company to purchase additional assets.

• Conflicts of Interest: Non-traded REITs typically have an external manager instead of their own employees. This can lead to potential conflicts of interests with shareholders. For example, the REIT may pay the external manager significant fees based on the amount of property acquisitions and assets under management. These fee incentives may not necessarily align with the interests of shareholders.

The Risks Associated with Publicly Traded REITs

Publicly traded REITs are generally considered safer investments than non-traded REITs. However, there are still risks:

• Interest rates moving higher. This will reduce demand for REITs. An argument can be made that rising interests rates indicate a strong economy, which will then mean higher rents and occupancy rates. But historically, REITs don’t perform well when interest rates go up.

• Choosing the wrong REIT. A good current example are Suburban malls, which are in a widely reported decline. You wouldn’t want to invest in a REIT with exposure to a suburban mall. Trends change, so be sure to do your research on what’s current.

• Tax Consequences. Income distributions that occur from current or accumulated earnings are usually taxed as ordinary income. These taxation rates change when the dividends are taxed, which can carry a tax rate of 15-20% depending on income bracket. Being aware of these tax rates should be factored into your decision of investing.

• Unspecified Properties. The full portfolio of a REIT may not have specified properties. When this happens, investors have an enormous risk because they are not guaranteed reliable investment properties. It is wise to look at the percentage of the REIT that has specified properties to determine whether the investment is worthwhile.

• Lack of Diversification. REITs can lead to lack of diversification in portfolios if investors invest in various stages of the REIT process. It is wise to only invest a portion of your portfolio in REITs, if any at all.

You May Recover Losses in Real Estate Investment Trusts through FINRA Arbitration

We believe that investors who have sustained losses in a Real Estate Investment Trust may be able to recover their losses through a FINRA arbitration claim. If you lost money in a Real Estate Investment Trust you should seek the advice of a lawyer who has experience representing investors in investment fraud and broker negligence cases, including REIT cases, to discuss your rights.

At Goodman & Nekvasil we work on a contingency basis for every one of our clients. No recovery = no fees or costs means that, as our client, you owe us nothing unless we obtain a recovery on your behalf. Attorney’s fees are only collected if you receive a recovery, and the same is true for costs. We bear the costs of your case throughout the process, only receiving compensation if you recover some of your losses. If you don’t win a recovery, we don’t get paid. We have established a fee structure that not only represents the faith we have in our clients’ cases but also motivates our firm truly to work in your best interest. We have aligned our goals with our clients’ goals, and it allows us aggressively to pursue recoveries with all of our resources. We are devoted to achieving the best outcome for every one of our clients.