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Northstar Real Estate Income II Involved in REIT Complaints

Northstar Real Estate The securities and investment fraud law firm Fitapelli Kurta is interested in speaking to investors who have complaints regarding the Northstar Real Estate Income II real estate investment trust (REIT).

According to the company’s website, NorthStar Real Estate is a “public, non-traded real estate investment trust (REIT) that originates, invests in and manages a diversified portfolio of commercial real estate debt, commercial real estate securities and select equity investments.” A press release published on November 9, 2016 announced that NorthStar Real Estate Income II “priced a $284.2 million non-recourse, match-term, non-mark-to-market financing transaction in the form of a commercial mortgage-backed securitization (CMBS), NorthStar 2016-1, at a weighted average cost of funds of LIBOR + 2.07% and an advance rate of 68% ($193 million of investment grade bonds issued and sold).”

The transaction was “collateralized by a pool of 10 commercial real estate mortgage loans, all but one of which was directly originated by NorthStar Income II and three senior participations originated by NorthStar Real Estate.” NorthStar Income II contributed about $254.7 million of collateral; NorthStar Income contributed another $29.5 million of collateral in the transaction, which closed on November 9.

Another press release published in October 2016 announced that the company had recently entered into two portfolio transactions, committing approximately $370 million in funds. According to NorthStar’s chief executive officer and president Daniel Gilbert, “these two investments have tremendous diversification with exposure to 39 industrial net leased properties in one case and 41 institutional quality private equity real estate funds (PERE funds) in the other, which have varied exposure by asset type and geographic location. These are both institutional quality investments with strong cash flow that we believe will be accretive to our historical dividend and provide value growth.”

Real estate investment trusts, or REITs, are investment entities that own assorted forms of real estate or interests in real estate. They use the combined funds from a pool of investors to purchase real estate property; they can be publicly traded or privately held, traded on the stock market or not traded at all. As such, they are highly illiquid investments. While they have the benefit of extending new opportunities to investors who otherwise could not access certain real estate investments, non-traded REITs may be particularly risky for short-term investors and even long-term investors. REITs are also taxed on an individual level and can lead to property taxes as high as 25% of the sum operating expenses. Investment professionals who recommend unsuitable REITs may be subject to disciplinary action by FINRA or the Securities and Exchange Commission.

If you or someone you know has lost money investing in the Northstar Real Estate Income II, call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: Fitapelli Kurta only gets paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.