Leo Wells, CEO of Wells Real Estate Funds, told broker-dealers that his firm will not register any new nontraded REITs pending new guidelines that are expected to be published by the Financial Industry Regulatory Authority (FINRA). He indicated that his firm needs “clarity” before marketing any new products (“All’s not well as Wells halts REIT […]
Posts belonging to Category REITs
Wall Street’s recent promotion of alternative investments should warrant serious concern among investors. It serves as an unpleasant example of history repeating itself. In the mid-1980s, Wall Street firms became enamored with limited partnerships (a form of alternative investment) that invested in so-called hard assets, paid the firms high commissions and fees, were illiquid and […]
Wells Timberland REIT recently revised the estimated value of its shares down to $6.56 per share, 34.4% below its 2006 initial public offering price of $10 per share. The new estimate is reportedly based on appraisal information from a forest consulting firm and a certified public accounting firm; however, the REIT’s board made the new […]
InvestmentNews is reporting that the Behringer Harvard Strategic Opportunity Fund I owes more money than it can pay, that its liabilities exceed its assets (“Behringer Harvard opportunity fund under water”). “Behringer Harvard informed brokers last week of the fund’s problems and is preparing to inform investors by Friday,” according to the article. The Behringer Harvard […]
Another nontraded REIT, CNL Lifestyle Properties Inc. (CNL), has informed investors that it is worth significantly less than they paid for it, and that it will also be cutting its dividend. CNL has reported that its share price had declined from its offering price of $10.00 down to $7.31 per share, a 27% decline (“Another […]
The first of many cases involving sales of Apple REITS by David Lerner Associates Inc. has resulted in an arbitration award in favor of the aggrieved investors, Joseph Graziose and Florence Hechtel. A Financial Industry Regulatory Authority (FINRA) arbitrator ordered the firm to pay them back $24,450 for their shares of Apple REIT Nine, and […]
Inland American Real Estate Trust Inc. is being investigation by the Securities and Exchange Commission according to that firm’s quarterly report. The SEC’s investigation is reportedly focusing on fees. Inland American is the industry’s largest nontraded real estate investment trust, and has $11.2 billion in real estate assets. Inland American is one of five REITs […]
The Financial Industry Regulatory Authority (FINRA) is investigating and considering legal action against a “captive” broker-dealer of a real estate investment company for the second time in three years. (See InvestmentNews article by Bruce Kelly entitled “Nontraded REITs’ B-D faces another probe”).
Nontraded REITs are both illiquid and unsafe. Investors are encouraged to be extremely wary of these investments. Recent developments have shown that nontraded REITs haven’t performed as represented.
Green Street Advisors ? the “industry leader in REITs research” ?recommends against investing in nontraded REITs. Investors who want exposure to the real estate market would be better off investing in publicly traded REITs, according to a report issued by the firm. (“Nontraded REITs should be a nonstarter for clients: Green Street,” InvestmentNews).