People who invested in CNL Healthcare Properties may be able to file investment fraud claims against brokerage firms who may have inappropriately recommended the high-risk investments to investors.
In 2018, CNL Healthcare Properties suspended its distribution reinvestment plan and stock redemption plan leaving unsuspecting investors with no future stock distributions. CNL Healthcare Properties, a non-traded real estate investment firm (REIT), makes investments in healthcare markets including acute care facilities, medical offices, and senior housing sponsored by CNL. Brokerage firms who recommended high-risk investments in CNL Healthcare Properties are now under investigation for failing to perform due diligence to ensure investments were suitable for investors based on their age, net worth, financial needs, and investment experience.
Non-traded investments are typically sold as unregistered securities and involve a high degree of risk. Because non-traded investments are not registered, they lack the regulatory oversight that more traditional investment products like stocks and bonds would have. Within the investment industry, non-traded investments like the ones with CNL Healthcare Properties are known for their high sales commissions and due diligence fees. Many brokers push these products to unsuspecting or inexperienced investors to make higher profits for themselves. Unethical brokers often downplay the high risk of REIT investments to investors and misrepresent the potential for high income and tax benefits.
The CEO of CNL Healthcare Properties, Stephen Mauldin, stands by the company's decision to suspend its distribution reinvestment plan and stock redemption plan to investors and stop all primary equity offerings in March 2019. Mauldin says that alternatives may include a merger or other type of transaction with a third party or distribution of net proceeds to shareholders by selling CNL assets. Selling the company or liquidating company assets will require shareholder approval.
CNL Healthcare Properties initially launched in 2011 and made its first investment in 2012. In 2016, CNL Healthcare Properties II made its first public offering of $1.75 billion. By the second quarter of 2018, the company had raised investor equity worth $44 million. The company currently oversees a portfolio of three properties with an investment cost of approximately $60 million.
Investors who are victimized by broker fraud or misconduct may recover financial losses with help from an investment fraud attorney. Damages for financial losses may include investment principal, , attorney's fees, arbitration costs, and even punitive damages for broker conduct that is deemed egregious.