Investor Lawyers Blog
Third-party real estate investment firm Everest REIT Investors I, LLC (“Everest”) recently launched an unsolicited tender offer to purchase up to 780,000 shares of common stock in Cole Credit Property Trust IV, Inc. (“Cole Credit IV”), at $6.60 per share.
Cole Credit IV was formed in July 2010 and is structured as a publicly registered, non-traded REIT. Shares issued through its offering were priced at $10 per share. As of December 31, 2017, Cole Credit IV had raised approximately $3.4 billion in investor equity. While the non-traded REIT has most recently estimated its share value at $9.37 per share, Cole Credit IV further “states that such figure is based on numerous assumptions and judgments and there can be no assurances that such amount would be realized upon a liquidation of assets or other liquidity event.”
Non-traded REITs pose a great deal of risks that are often not readily apparent to retail investors, and may not be adequately explained by the financial advisors and stockbrokers who recommend these complex investments. One significant risk associated with non-traded REITs concerns their high up-front commissions, typically between 7-10%. In addition to high commissions, non-traded REITs like Cole Credit IV generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.
Recent pricing on shares of Cole Credit Property Trust V, Inc. (“CCPT V” or, the “Company”) – at reported prices of $17.25-$17.75 – suggests that investors who chose to sell their shares on a limited secondary market may have sustained considerable losses of up to 30% (excluding any distributions received to date). Formed in December 2012, CCPT V is structured as a Maryland corporation. As a publicly registered, non-traded real estate investment trust (“REIT”), CCPT V is focused on the business of acquiring and operating “a diversified portfolio of retail and other income-producing commercial properties.” As of October 31, 2018, the Company’s real estate portfolio consisted of 141 properties across 33 states, with portfolio tenants spanning some 26 industry sectors.