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).
Much to their dismay, investors in KBS Real Estate Investment Trust I (“KBS REIT I”) recently learned that shares which they purchased for $10 per share now have an “estimated” value of only $5.16. In his March 26, 2012 letter to shareholders, chief executive Charles Schreiber, Jr. also told them that they would no longer [...]
Investors in the Cornerstone Core Properties REIT Inc. were recently told by the company that the shares, once valued at $8, are now worth $2.25 (see article in InvestmentNews by Bruce Kelly). The article references a letter from the REIT’s chairman and chief executive Terry Roussel, as saying “The estimated per-share value has been adversely [...]
The prospect of several more years of extremely low interest rates is causing people who depend on interest income to accept Wall Street’s recommendations to purchase relatively illiquid and opaque alternative investments like structured products, non-traded REITs, hedge funds and variable annuities. (“Itchy Investors Ramp Up the Risk,” Wall Street Journal). Regulators worry that the [...]
The Financial Industry Regulatory Authority has issued a Regulatory Notice (12-03, Jan. 2012) to “remind” its member firms of their sales practice obligations with regard to complex products, and to provide them “guidance” in exercising heightened scrutiny and supervision over marketing and sales of complex products. Complex products are not defined in the Notice, but [...]
Given the array of exotic alternative investments being sold to the public, it’s logical that many investors often don’t understand what they are buying. What is even scarier is that it is likely their professional investment adviser doesn’t understand the alternative investment either. Investment advisers ? 75 percent of them ? admit they do not [...]