NorthStar Healthcare Income REIT Investment Losses

NorthStar Healthcare Income, Inc investors seek claims that they were sold risky investments from brokers

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. In June of 2019, the net asset value was $6.25 per share. As of June 30, 2020, the net asset value was lowered to $3.89 per share. 

NorthStar REIT engaged a third-party independent valuation company and consulting firm, Duff & Phelps, to assist with a valuation of the company. The valuation is based on the estimated value of NorthStar’s assets, minus the estimated value of its liabilities, divided by the number of outstanding shares on June 30, 2020. Overall, the estimated value of NorthStar’s healthcare properties, joint venture investments, and healthcare debt investments was approximately $2.06 billion. 

The NorthStar REIT is a high-risk investment that is not suitable for every investor. Due to the high commissions, brokers earn on these products, they are frequently advertised to investors who cannot profit from them and do not appreciate their risks. Investment advisors who recommend unsuitable REITs may be subject to disciplinary action by FINRA or the Securities and Exchange Commission.

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.