On November 5, 2013, TIER REIT, Inc. (formerly known as Behringer Harvard REIT I, Inc.) filed its report for the third quarter with the Securities and Exchange Commission. Behringer Harvard REIT I changed its name to TIER REIT in June 2013.
TIER REIT’s recently filed 10-Q states that shareholder equity has slid from $781 million at the end of 2012 to $773 million at the end of September 2013. With 299,191,861 shares of stock outstanding, the book value of TIER REIT’s shares stands at $2.58 per share.
Despite this slide in book value, TIER REIT revised its estimated share value upwards from $4.01 to $4.20. Investors should keep in mind that the estimated share value in no way reflects the market value of the shares. There is no public market for TIER REIT shares. The shares have recently traded on a secondary market for $1.91.
Many brokerage firms that sold Behringer Harvard REIT I/TIER REIT have urged investors to be patient and have promised that they will eventually recover a substantial portion of their investment when TIER REIT restructures itself and becomes a traded REIT. Given the continued downward slide of the book value of TIER REIT shares, it does not appear likely that investors will ever recover a significant portion of their principal.
According to the operator of one prominent non-traded REIT secondary market – where investors can sell their shares in this company at a discount to book value — speculators have avoided TIER REIT because “it is a failed company.”
In 2012, a class-action lawsuit was filed on behalf of TIER REIT shareholders against the company’s directors and former management company. The lawsuit relates to alleged misrepresentations concerning the value of the stock through the company’s dividend reinvestment program. Essentially, the complaint alleges that the defendants sold stock to the shareholders through the dividend reinvestment program for $10 per share despite their knowledge that the stock was worth considerably less than this because of the company’s poor performance.
While some investors may receive something from the class-action lawsuit, investors’ best chance at achieving a meaningful recovery requires filing an arbitration action against the broker-dealer firms that sold the investment. Many brokerage firms misrepresented the risks of this investment and concealed the massive up-front commissions and fees that both the brokerage firms and TIER REIT’s sponsor received.
TIER REIT investors are encouraged to contact the law firm of Blau & Malmfeldt at 312-443-1600 for a free initial consultation. Blau & Malmfeldt is a law firm that represents investors across the country in securities, commodity futures, partnership, and shareholder rights disputes.