Carter Validus Mission Critical REIT II (Carter Validus) is a risky and complex alternative investment headquartered in Tampa, FL that was typically a high-commission product for the brokerage firms and financial advisors selling the products, but these products were often marketed to individual retail (Main Street) investors as a non-traded real estate investment trusts (REITs) and presented as safe, income-producing, investments. In that process, the material risks of the product and the investments were not always properly disclosed to investors.
Carter Validus focuses on data centers and healthcare properties. Carter Validus investors have recently received a tender-offer notice from Mackenzie Realty Capital offering $4.05/share. For investors who originally made investments at or near the $10.00/share price range, this represents a substantial loss in value. What’s more, the sponsor stated value on account statements has only recently declined from $9.25/share to $8.65/share. However, that valuation may only be providing a temporary sense of security for investors as it might “look” good for now, but it largely based on information prior to the effect of Covid-19 in the first quarter of 2020.
Carter Validus has recently notified investors that some tenants have requested rental concessions in the form of decreased rates or deferrals, and supposedly this is only predicted to have a short-term impact for an insignificant number of tenants – while also noting the uncertainty in the global economy and how that might affect various properties.
Obviously, it was enough of a concern that Carter Validus suspended the share repurchase program until further notice.
What Should Investors Do?
If you are an investor that was sold Carter Validus REIT by a financial advisor based on promises of an income stream, or you received inadequate (or non-existent) disclosures about your non-traded real estate investment trust (REIT) product investment, then you have a couple of options.
First, you could wait for a change in the market a hope something happens. This is unlikely because these types of non-traded REITs typically lose the principal and become harder to sell over time. In addition, there are statutes of limitations and rules that limit how long you have to make a claim. If you fail to make a claim in a certain period of time, you risk not being to file anything.
Second, you can file a Financial Regulatory Authority (FINRA) arbitration claim. This is a good option for many Carter Validus investors. It is an alternative form of dispute resolution that is private, and quicker and more efficient than traditional court litigation. In addition, there are typically no depositions, as it is almost entirely paper-based discovery.
Recent cases involving regulators such as the FINRA suggest that privately placed alternative investments, whether private equity or other forms of investments are not always safe for investors who have not invested because of their age or risk tolerances.
The best first step is to contact an experienced investment fraud attorney who can review the status of these and similar investments in your accounts. He will properly advise you regarding your rights and options, also assist you by taking steps to help you recover your investment losses. Call us at 1-800-856-3352 for a free consultation!