NorthStar Healthcare Income REIT Chairman Justin Chang Resigns

NorthStar has named Richard Welch as its new chairman, effective immediately. 

The Sonn Law Group is currently investigating allegations that brokers recommended investments in Northstar Healthcare Income, Inc. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case. 

Northstar Healthcare Income, Inc. (“NorthStar”) is a publicly registered, non-traded real estate investment trust (REIT) that is sponsored by Colony Capital, “a leading global real estate and investment management firm” with $43 billion in assets under management. 

According to NorthStar’s website, the company was “formed to originate, acquire and asset manage equity and debt investments in healthcare real estate[,]” focusing mainly on the senior citizen housing sector which includes independent living facilities, assisted living facilities, memory care, and skilled nursing facilities.

The website describes the needs-driven senior housing sector as “an attractive asset class” and states that the REIT is intended for investors who are, “seeking income through regular cash distributions,” (though it stresses that there is no guarantee of these), who want the potential for capital appreciation, reduced volatility and a low correlation to traditional asset classes. 

Between 2013 and 2018, NorthStar raised about $2 billion and set up a portfolio involving more than 650 properties. Northstar originally sold assets for $10/share. However, Northstar began reducing distribution rates in December 2017 when the distribution rate was decreased from 6.67% to 3.31%. By October 2018, it had notified investors that it would only buy back shares from an investor if qualifying disability or death were factors. In December 2018, the REIT reduced its net asset value from $8.50/share to $7.10/share.  In February 2019, NorthStar suspended all income distributions for investors.

Justin Chang, the former chairman for NorthStar, resigned according to SEC filings. Chang indicated that his resignation was not due to any disagreement with NorthStar on any matter. NorthStar named Richard Welch, the managing director and head of healthcare at Colony Capital, as its new chairman. 

The NorthStar REIT is a high-risk investment that can be very volatile, which means that it is not suitable for every investor. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  These products have become so popular among brokers without providing any benefit to investors that many states now limit investors from investing more than 10% of their liquid assets in non-traded REITs.  Investment professionals who recommend unsuitable REITs may be subject to disciplinary action by FINRA or the Securities and Exchange Commission.

 Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. If a broker recommended unsuitable investments with Northstar, or failed to disclose the risks associated with investing REITs, their brokerage firm may be liable for investment or other losses suffered.

Contact Sonn Law to Discuss Recovery Options

The Sonn Law Group is currently investigating allegations that brokers recommended investments in Northstar Healthcare Income, Inc. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.