In July 2009, Ameriprise Financial Services, Inc., an American Express subsidiary, was sanctioned by the Securities & Exchange Commission and ordered to pay over $17 million dollars for their participation in the unlawful sales of Carey REITs and for receiving over $30 million in undisclosed payments on the sales of Carey REITs ( CPA:10, CPA:12, CPA:14, CPA:15 & CPA:16) and CNL REITs (CNL Hospitality Properties, Inc. , CNL Retirement Properties, Inc., CNL American Properties Fund).
According to the SEC release, Ameriprise sold over $3.5 billion worth of Carey and CNL REITs without disclosing this revenue, which was in addition to commissions, dealer fees, etc., to purchasers. As we have previously warned, non-traded REITs often are burdened with very high up front commissions and fees, thereby limiting the net amount available for investment.
On May 19, 2010, Hines Global REIT, Hines Real Estate Investments, Inc. and Hines Global REIT Advisors LP entered into an agreement with Ameriprise who agreed to act as a selected dealer to sell the IPO. For its services, Ameriprise collected the following fees:
- 7% selling commission
- 1.5% marketing fee
- unspecified amount of due diligence expense reimbursement
- unspecified amount of costs of technology reimbursement
According to their 12/31/2011 Form 10K filed with the SEC, Hines REIT:
- was formed in 2003 and raised $2.5 billion in three public offerings between June 2004 and December 2010.
- was 55% leveraged as of 12/31/2011
- made per share distributions in 2011, 2010 and 2009 of $.50, $.55 and $.62 respectively, which represents a change from 6% to 5%, based on initial offering price of $10.08.
- had an estimated share value of $7.78
- a portion of distributions represents a return of invested capital
The company estimated value of $7.78 represents a loss of 23% from the $10.08 purchase price, however, as we have previously reported, since this is a non-traded REIT the only place it can be sold is on a secondary market, which may result in a sales price of 25% less than the estimated value (ie; $5.83) .
If you have losses in Hines REIT or any other non-traded REIT including Behringer Harvard, Cole Credit Property Trust II, Cornerstone Core Properties, Lerner Apple REITs, Healthcare Trust of America, Inland American, Inland Western, KBS REIT I, Retail Properties of America, Wells or Wells Timberland REIT, please do not hesitate to contact us.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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