Did you lose money investing in Oaktree Real Estate Income Trust (Oaktree REIT)?
Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing in Oaktree Real Estate Income Trust (Oaktree REIT), a publicly registered non-traded REIT, at the recommendation of their financial advisor. If you suffered losses, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the broker-dealer and/or registered representative that recommended the investment.
According to its website, Oaktree Real Estate Income Trust (Oaktree REIT) seeks to invest in a diversified portfolio of institutionally-managed real estate investments that generate attractive, stable current income for regular distribution to its stockholders. The REIT targets income-producing properties that offer long-term growth potential to achieve attractive risk-adjusted total returns, with an emphasis on downside protection.
UPDATE 9/23/2020: Oaktree Real Estate Income Trust (Oaktree REIT) has declared a slightly lower net asset value per share for its Class S and Class I common stock, as of August 31, 2020. The NAV per share is based on the estimated value of the company’s assets, less the estimated value of its liabilities divided by the number of outstanding shares, all as of August 31, 2020. The REIT valued its Class S shares at $10.30 per share and its Class I shares at $10.35. Last month, Class S shares were valued at nearly $10.33 and Class I shares at $10.36 each. Shares were originally priced at $10.00 each, plus different fees and selling commissions. Class S shares are available through brokerage and transactional-based accounts, while Class I shares are available to institutional investors. As of August 31, 2020, the REIT had not sold any of its Class T shares or Class D shares, which are available through brokerage and transactional-based accounts, and fee-based programs, respectively.
UPDATE 6/18/2020: On June 5, 2020, Oaktree Real Estate Income Trust (Oaktree REIT) entered into a line of credit (the “Credit Agreement”) with Oaktree Fund GP I, L.P. (“Lender”), an affiliate of Oaktree Real Estate Income Trust (Oaktree REIT), providing for a discretionary, unsecured, uncommitted credit facility in a maximum aggregate principal amount of $125 million. The Credit Agreement expires on June 30, 2021, subject to one-year extension options requiring Lender approval. Borrowings under the Credit Agreement will bear interest at a rate of the then-current rate offered by a third-party lender, or, if no such rate is available, LIBOR plus 2.25%. Each advance under the Credit Agreement is repayable on the earliest of (i) Lender’s demand, (ii) the stated expiration of the Credit Agreement, and (iii) the date on which Oaktree Fund Advisors, LLC or an affiliate thereof no longer acts as Oaktree Real Estate Income Trust’s (Oaktree REIT) investment adviser; provided that Oaktree Real Estate Income Trust (Oaktree REIT) will have 180 days to make such repayment in the event of clauses (i) and (ii) and 45 days to make such repayment in the event of clause (iii). To the extent Oaktree Real Estate Income Trust (Oaktree REIT) has not repaid all loans and other obligations under the Credit Agreement after a repayment event has occurred, Oaktree Real Estate Income Trust (Oaktree REIT) is obligated to apply the net cash proceeds from its public offering and any sale or other disposition of assets to the repayment of such loans and other obligations; provided that Oaktree Real Estate Income Trust (Oaktree REIT) will be permitted to (x) make payments to fulfill any repurchase requests pursuant to its share repurchase plan, (y) use funds to close any acquisition of property which Oaktree Real Estate Income Trust (Oaktree REIT) committed to prior to receiving a demand notice and (z) make quarterly distributions to its stockholders at per share levels consistent with the immediately preceding fiscal quarter and as otherwise required for it to maintain its REIT status. The Credit Agreement also permits voluntary prepayment of principal and accrued interest without any penalty other than customary LIBOR breakage costs. The Credit Agreement contains customary events of default. As is customary in such financings, if an event of default occurs under the Credit Agreement, Lender may accelerate the repayment of amounts outstanding under the Credit Agreement and exercise other remedies subject, in certain instances, to the expiration of an applicable cure period.
What are Real Estate Investment Trusts (REIT)?
A Real Estate Investment Trust (“REIT”) is a complex investment that is generally only suitable for sophisticated high-net worth investors, and then only in certain circumstances. A REIT is an entity that owns, and may also manage, income producing real estate. REITs pool capital from multiple investors and use it to purchase properties, similar to mutual funds and other pooled investment vehicles.
A Real Estate Investment Trust can be offered in several different forms. A Public Exchange Listed REIT is registered with the U.S. Securities and Exchange Commission (“SEC”) and is publicly traded on a national securities exchange. A Public Non-Listed REIT is registered with the SEC, but does not trade on a major securities exchange. Finally, a Private REIT, also known as a private-placement REIT, is not registered with the SEC and does not trade on a national securities exchange.
Oaktree Real Estate Income Trust (Oaktree REIT) Due Diligence Requirement
FINRA requires brokerage firms to conduct due diligence on investments, such as Oaktree Real Estate Income Trust (Oaktree REIT), and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as Oaktree Real Estate Income Trust (Oaktree REIT), or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
Request a Free Consultation with a Securities Attorney
If you suffered losses investing in Oaktree Real Estate Income Trust (Oaktree REIT) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
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