UN-Traded REITs

[Sam]

Who (besides mathjak107) has experience with untraded REITs such as Apple Hospitality.

Can you share your actual past and current experiences? I have read as much as I can about Apple Hospitality, Apple 2, 3, ... and about David Lerner in the past 24 hours. Although the products are ok, I don't see anything outstanding. The disadvantages I sees overweight almost everything else (illiquidity, unknown future price, no easy way to get out.)

It does not have to be David Lerner's products, any untraded REIT would do.

Thanks in advance,
Sam

 

[mathjak107]

Who (besides mathjak107) has experience with untraded REITs such as Apple Hospitality.

Can you share your actual past and current experiences? I have read as much as I can about Apple Hospitality, Apple 2, 3, ... and about David Lerner in the past 24 hours. Although the products are ok, I don't see anything outstanding. The disadvantages I sees overweight almost everything else (illiquidity, unknown future price, no easy way to get out.)

It does not have to be David Lerner's products, any untraded REIT would do.

Thanks in advance,
Sam

i only have experience with apple which i highly recommend. i looked at comments about wells and others and there were some postings about not being thrilled about some of them. i really cant comment about any of the others . so far apple 1 and 2 which are the only 2 that reached maturity and were sold turned out to be excellent returns. im in 7 now since march 2006 and im happy with my 8-1/2%.

i just heard last night that vii hit its goal of 1 billion and will be closed to new money in a week or so

 

[saluki9]

I have a lot of experience with

Dividend Capital Trust, Inland, Inland Western, Wells (sadly), and AEI limited partnerships

What do you want to know?

In most cases the cost is higher to get in in that you would get in a traded REIT. The counter to that is that you aren't paying huge multiples when the REIT market is racing. I prefer to invest directly in the ground for my own investments, but for the most part clients have been very happy with them. IRC in particular gave people a nice pop when it went public and has performed well. In addition Dividend Capital shareholders also did very well when the IPO hit last winter.

 

[mathjak107]

I have a lot of experience with

Dividend Capital Trust, Inland, Inland Western, Wells (sadly), and AEI limited partnerships

What do you want to know?

In most cases the cost is higher to get in in that you would get in a traded REIT. The counter to that is that you aren't paying huge multiples when the REIT market is racing. I prefer to invest directly in the ground for my own investments, but for the most part clients have been very happy with them. IRC in particular gave people a nice pop when it went public and has performed well. In addition Dividend Capital shareholders also did very well when the IPO hit last winter.

from comments i read, wells had exorborant fees

 

[Sam]

I have a lot of experience with

Dividend Capital Trust, Inland, Inland Western, Wells (sadly), and AEI limited partnerships

What do you want to know?

In most cases the cost is higher to get in in that you would get in a traded REIT. The counter to that is that you aren't paying huge multiples when the REIT market is racing. I prefer to invest directly in the ground for my own investments, but for the most part clients have been very happy with them. IRC in particular gave people a nice pop when it went public and has performed well. In addition Dividend Capital shareholders also did very well when the IPO hit last winter.

Great, let's start with some basic questions:

1) Do you know ahead of time how long you have to hold your "shares"? If not, what is the typical hold time? 5 yrs, 7 yrs, 10 yrs?

2) Do you have voting power? Or does "management" make all decisions for you.

3) For those that you owned in the past, how long did you own each of them? After "redemption", what was the actual annualized return for each of them?

Thanks,

 

[saluki9]

Great, let's start with some basic questions:

1) Do you know ahead of time how long you have to hold your "shares"? If not, what is the typical hold time? 5 yrs, 7 yrs, 10 yrs?

2) Do you have voting power? Or does "management" make all decisions for you.

3) For those that you owned in the past, how long did you own each of them? After "redemption", what was the actual annualized return for each of them?

Thanks,

1. Most of them give you a timeline by which they have to start listing the properties for sale or take the company public. In most cases it is 7 years until liquidation. Inland has gone the route of the public listed securities market which has worked out well for their shareholders.

2. Unless it is an LP you are a shareholder and get to vote like any other shareholder. Obviously if you want to run things day to day you should go buy your own building as these are meant to be passive investments. You will be voting on directors, issuing new shares, whether to list on a public exchange, etc.

3. I think the returns people have seen in the past are not representative of what they will see in the near future.

 

[Sam]

3. I think the returns people have seen in the past are not representative of what they will see in the near future.

Understood. But what were they anyway? How did they compare with the Dow Jones REIT index (.REIT or ^REIT) for the periods you actually owned?

4) Can you get out before liquidation? If so, what are the penalties?

 

[saluki9]

Understood. But what were they anyway? How did they compare with the Dow Jones REIT index (.REIT or ^REIT) for the periods you actually owned?

4) Can you get out before liquidation? If so, what are the penalties?

Sorry, I'm licensed so I really can't make any representations about past or future returns without a full disclosure of fees, taxes, risk, etc.

4. Many of the new funds have some liquidity option after a year or two, they also usually have death puts. That being said, you should assume you will be in for the whole time.

 

[Sam]

Sorry, I'm licensed so I really can't make any representations about past or future returns without a full disclosure of fees, taxes, risk, etc.

So, you sell untraded REITs?

 

[saluki9]

So, you sell untraded REITs?

Nope, but I work for an advisory firm and hold a couple licenses which makes it a minefield for me to make representations about returns for these products.

I have done a lot of research into these products and understand pretty well how they work.

 

[mathjak107]

reits

Nope, but I work for an advisory firm and hold a couple licenses which makes it a minefield for me to make representations about returns for these products.

I have done a lot of research into these products and understand pretty well how they work.

ours have a time line of 6 to 7 years , if conditions arent favorible for a sale they can wait.

apple i and ii both averaged around 17%. i wouldnt count on that anymore, in fact like i said i buy it for income, 8-1/2% worth. as long as i beat 5% of a cd or money market my income bucket is happy

if you sell after a year you go in the re-investment bucket and get your origional amount back.

the interest is only 80% taxable as you get a depreciation allowance.

 

[Anansi]

I don't have direct experience with unlisted REITs, but we have invested in several TICs where we have actual fractional ownership in properties. These usually offer the option of investing in the same properties this way or as unlisted REITS and most of the features, other than the legal structure, seem to be the same.

The are definitely complex, expensive to get into, and not liquid. As a TIC, however, they qualified for a 1031 exchange, deferring an large capital gain liability, they provide a (so far) stable and (in one case at least) increasing cash flow. Since we had no forseeable need for liquidity, that issue was not a concern.

 

[Sam]

Thank you all for your inputs.

 

[mathjak107]

Thank you all for your inputs.

after today with most public reits down over 3% in 6 hours you can see why an un-listed reit adds stability. same buy out price as i bought in at, same interest rate as always

 

[ScaredtoQuit]

How do you invest in untraded REIT's?

 

[mathjak107]

check out apple hospitality reits on line. i like them