Wells REIT II Investor Recovery Options

December 27, 2011

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Wells REIT II real estate investment trust is an investment that is simply a fundraising entity for real estate mogul Leo F. Wells III.  Brokers sold this as a safe, guaranteed return investment, that ultimately may be just a bank account for the Wells family.  Conflicts of interest in this investment are rampant, and investors who purchased shares may have a claim against their brokers.   Wells’ prospectus disclosed the following risks, many of which were not told to investors:

  • No public market currently exists for our shares of common stock and we have no current plans to list our shares on an exchange.  If you are able to sell your shares, you would likely have to sell them at a substantial discount from their public offering price.
  • The offering price was not established on an independent basis and bears no relationship to the net value of our assets.  The offering price is likely to be higher than the amount you would receive per share if we were to liquidate at this time because of the up-front fees that we pay in connection with the issuance of our shares as well as the recent reduction in the demand for real estate as a result of current disruptions in the credit markets and the economic slowdown.
  • If we raise substantial offering proceeds in a short period of time, we may not be able to  invest all of the net offering proceeds promptly, which may cause our distributions and the long-term returns of our investors to be lower than they otherwise would.
  • We are dependent upon our advisor and our dealer manager to conduct our operations and this offering; thus, adverse changes in the financial health of our advisor or dealer manager or our relationship with them could cause our operations to suffer.
  • We will pay substantial fees and expenses to our advisor, its affiliates and participating broker-dealers, which payments increase the risk that you will not earn a profit on your investment.
  • Our advisor and its affiliates will face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other Wells-sponsored programs and conflicts in allocating time among us and these other programs.
  • Our failure to qualify as a REIT for federal income tax purposes would reduce the amount of income we have available for distribution and limit our ability to make distributions to our stockholders.
As shown above, the Wells REIT is a risky investment that should be only a small percentage of even the most savvy investors’ portfolio.  If you have shares in Wells REIT II, please contact Jeffrey Salas at 312.803.4963 for your recovery options, or fill out the contact form below.

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