What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: December 31, 2020

Stoltmann Law Offices, P.C. is a Chicago-based investor rights law firm that offers representation nationwide on a contingency fee basis. We represent investors that lose money in bad investment products like Watermark Lodging Trust REIT in cases against brokerage firms and investment advisers. If you or someone you know has suffered investment losses in Carey Watermark n/k/a Watermark Lodging Trust REIT, please contact Stoltmann Law Offices for a no-obligation, free initial consultation.

In late November, Watermark Lodging Trust REIT reported its “NAV” or “Net-Asset-Value” as $5.51 per Class A share and $5.45 per Class T share. When this REIT was sold to investors, the NAV was $10 per share. Investors are looking at a loss on their December statement of nearly 50% of their principal investment. The Watermark Lodging Trust REIT was previously known as the Carey Watermark Investor and Carey Watermark Investors 1 REITs, which merged in April 2020.

If investors try to sell their shares on the secondary market, the bids are as low as $3 per share. Watermark Lodging REIT concentrates its real estate portfolio in hotels/hospitality which has been devastated this year by the COVID-19 pandemic. Although it is easy to blame the pandemic for these losses, an excuse brokers will certainly rely on, the fact is, this REIT has always been a high risk, speculative investment that concentrated investor money in a few properties in one narrow sector of the real estate world; hotels.  Non-Traded REITs are sold, not bought, by investors because financial advisors and brokers receive massive sales commissions for selling them.  These are “alternative” investments that offer higher income rates on paper, but in reality, usually distributed your own money back to you as a “distribution” and rarely generate enough income from the underlying portfolio to sustain their distribution rates. Most non-traded REITs are heavily indebted so that they can use debt to pay distributions to keep the flow of investor money coming in.

Brokers sell non-Traded REITs like Watermark Lodging Trust under the guise of principal protection and high income. The principal-protection part of this sales pitch is based on a fallacy. The fact is, these investments are rarely suitable for retail clients, but are sold relentlessly by brokers.  The sales pitch almost always involves a story about avoiding “stock market” risks or volatility while enjoying income rates of 7% or 8%.  The only reason non-Traded REITs offer “low volatility” is due to the way they report their share price.  They are non-traded, which does not mean the underlying value of the portfolio they own isn’t subject to volatility or huge swings in value. Investors who open their December statements and see that the value of their Watermark Lodging Trust investment has been cut by 50% will have questions that deserve straight answers.

The good news is investors have legal rights and options in order to recover their investment losses.  If you were sold Watermark Lodging Trust by your financial advisor or broker, you can pursue a claim in FINRA Arbitration against the brokerage firm responsible for the broker’s conduct. The reality is, brokers are mostly salesmen who are introduced to products like Watermark Lodging Trust by their firms, who have selling agreements with the REIT, to sell, sell, sell. Please contact Stoltmann Law Offices at 312-332-4200 to discuss your legal options with a securities attorney. We offer representation on a contingency fee basis which means we do not get paid unless you do first!


The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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If you have suffered financial losses because of the negligence or fraud of your financial advisor or broker through unsuitable investment recommendations, over-concentration, churning, misrepresenting risks, conversion or selling away, you have legal rights and options to pursue recovery of those losses.

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