vendredi 27 mars 2015

Property Investors' Latest Horror: Zombie REITs

Posted on 22:27 by Immigration
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Property Investors' Latest Horror: Zombie REITs - WSJ




Quote:







Nontraded REITs are designed to return cash to investors two ways: through dividend payments and at the end of the fund’s life cycle through what are known as liquidity events, typically a sale or listing of the REIT on a public stock exchange. There is only a limited secondary market for nontraded REIT shares, giving small investors few options beyond simply waiting.



"Most REITs, once they stop raising money, have an 18- to 24-month window in which they’re looking to have a liquidity event,” and many don’t make it, said Dirk Aulabaugh, a managing director of real-estate research firm Green Street Advisors.

One such case is CNL Lifestyle Properties Inc., an owner of some prominent ski resorts, including Sunday River and Sugarloaf in Maine. The firm raised $2.9 billion from investors between 2004 and 2011.



CNL’s fundraising prospectus sets a deadline of Dec. 31, 2015, to return investors’ capital, but it is unlikely the company will be able to return most shareholders’ full investment. After being battered by the real-estate downturn, the fund reported its shares were worth $5.20 at the end of last year, down 24% from a year previous and nearly 50% from their offering price of $10.



CNL said in a written statement it is operating the fund on a longer timeline than most nontraded REITs, and pointed out that it has sold or agreed to sell about $1 billion in assets over the last year.


Full list of properties held by CNL:



Brighton Ski Resort Brighton, UT

Crested Butte Mountain Resort Mt. Crested Butte, CO

Cypress Mountain West Vancouver, BC, Canada

Gatlinburg Sky Lift Gatlinburg, TN

Jiminy Peak Mountain Resort Hancock, MA

Loon Mountain Resort Lincoln, NH

Mount Sunapee Mountain Resort Newbury, NH

Mountain High Resort Wrightwood, CA

Northstar-at-Tahoe Resort Lake Tahoe, CA

Okemo Mountain Resort Ludlow, VT

The Omni Mount Washington Resort Bretton Woods, NH

Sierra-at-Tahoe Resort Twin Bridges, CA

Stevens Pass Skykomish, WA

Sugarloaf Mountain Resort Carrabassett Valley, ME

Summit-at-Snoqualmie Resort Snoqualmie Pass, WA

Sunday River Resort Newry, ME



Glad to see failures when ski resorts are used as quick investment vehicles to squeeze and flip. Hopefully that scares off other groups from doing this. But it probably just means another giant is going to consolidate even more properties, which sucks.





Property Investors' Latest Horror: Zombie REITs
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