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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • COLE CREDIT PROPERTY REIT INVESTORS KEEP YOUR EYES ON THE BIG LIQUIDITY EVENT 1 comment
    Feb 21, 2013 11:19 AM

    Cole Credit Property Trust II, one of the largest non-traded real estate investment trusts (REIT), recently told financial advisers that it hired two investment banks to pursue a "successful exit event." These exit events within the REIT industry are known as "liquidity events," which financial advisers and investors watch with great interest. The liquidation of a REIT's assets or an initial public offering (IPO) allows advisers to return a significant amount of capital invested back to investors, who usually pay $10 a share and receive a distribution or dividend ranging from 5% to 7%. Cole is the seventh-largest nontraded REIT that has stopped raising funds and is now selling shares after raising and investing close to $3.4 billion in assets. Cole primarily invested in single-tenant buildings occupied by retailers such as Walgreens and Rite Aid.

    A REIT is a company that owns, and in many cases, operates income-producing real estate. REITs own properties ranging from office and apartment buildings to warehouses, hospitals, shopping centers, and hotels. Some REITs also engage in financing real estate. REITs were designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

    In a letter to investment advisers, Cole Real Estate Investments' CEO Marc Nemer said Morgan Stanley and UBS were hired to move as quickly as possible toward a successful exit. Cole REIT share prices have been trading in the $9 price range, which is close to the $10 price offering. However, investors are encouraged to be extremely wary of non-traded REITs. Recent developments have shown that non-traded REITs have not performed as represented. This is evidenced by a significant drop in other large REIT investment values - a 30% to 50% decline in share prices due to real estate purchases made at the peak of the real estate boom. This may be the very reason Cole is heading straight for the exit.

    Have you suffered a loss of principal in the Cole Credit Property Trust II Real Estate Investment Trust? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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  • Interesting article. The disadvantage of investing in a non-traded REIT is the difficulty of timing the exit when the fund goes public. We were locked out of selling for 30 days (I think because we were considered to be insiders) and, by that time, the premium prices paid by the institutional investors during the IPO had degraded. Too bad because otherwise, we would have recycled our principal and profits into the next REIT of the same sponsor. As it was, except for the quarterly dividends at 6% for 18 months, we just about broke even.
    6 Mar 2013, 05:36 AM Reply Like
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