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Oaktree REIT Net Asset Value Lowered “FINRA” Lawsuit

Oaktree REIT Lawsuit

Haselkorn & Thibaut has recently received many complaints from investors involving improper recommendations of high-risk non-traded REIT investments like Oaktree REIT by broker-dealers.  Many investors are not familiar with the risks associated with these investments before buying them, or worse, trying to sell these types of investments and getting paid “pennies on the dollar.”

Anyone that has invested or has information about Oaktree REIT should call our toll free number at 1-800-856-3352 to review their case.  All information is confidential. Oaktree REIT investors will be given a free portfolio review as well as options to recover losses.

What Is Oaktree REIT?

Oaktree REIT, Inc., is a non-traded Real Estate Investment Trust sponsored by Oaktree Capital Management. The trust reportedly serves as an investment that diversifies a portfolio by creating multiple income-producing real estate and real estate-related debt investments.

According to the SEC’s fillings as of August 31, 2020, the company declared its net asset value per share for its class S and Class I common stock to be slightly lower. In June, we reported that the REIT announced a plan to enter into a $125 million credit line with a sponsor, Oaktree Capital Management, L.P. It was further noted that Oaktree REIT collected 94% of multifamily rents in April, and 87% of office rents in the same month. However, 5 of its 49 office tenants.

As noted by Oaktree, the lower NAV was due to write-downs on its real estate investments, including equity investments and debt liabilities. Further, these were partially offset by the gains made on its real estate-related debt investments. The rent and interest income were at 93% for August collections compared to July’s 95%. The contractual rent deferrals had been accounted for at 1% for August and 2% for July.

Previously the NAV reported for Class S was $10.33 and $10.36 for Class I shares. Presently, the NAV for Class S was $10.30 and $10.35 for Class I. Both the shares were initially priced at $10.00 exclusive of different fees and selling commissions.

Why Are Non-Traded REITS Like Oaktree Risky?

Compared to traditional investments like stocks, mutual funds, or bonds,  non-traded real estate investment trusts (REITs) are complicated and risky. They are generally more suitable for an experienced investor, such as sophisticated and institutional investors.

Nonetheless, financial advisors and stockbrokers need to make sure their recommendations are in alignment with the investors’ goals. The risk tolerance, net worth, experience, and investment objectives need to be considered while making recommendations to investors. However, brokers can earn high commissions on non-traded REITs, sometimes going up to 15%. Thus, the attractive commission rate incentivizes brokers to make unsuitable recommendations to investors.

Further, non-traded REITs generally lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.

In addition to this, non-traded REITs are illiquid and present difficulty to investors trying to sell their REITs due to the lack of buyers in the market. Even if they are successful in finding a buyer, their investments often turn into losses. Keeping this in mind, a broker must ensure their recommendations are suitable for investors. If a firm or broker recommends an investment due to self-interest motives, a FINRA arbitration claim can be filed against them.

Filing a Complaint against your Brokerage Firm

Haselkorn & Thibaut is a national securities arbitration, securities fraud, and investor protection law firm with locations in Florida, New York, Arizona, North Carolina, and Texas. If you have invested in Oaktree REIT, Haselkorn & Thibaut may be able to assist you further. Please call our law offices at 888-637-5510 for a free consultation with our skilled and experienced securities attorneys.

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