Let's ALL come clean on "motives". Investors and advisors!

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RealEstateGuy
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Joined: Thu Sep 01, 2011 10:58 am

Let's ALL come clean on "motives". Investors and advisors!

Post by RealEstateGuy » Mon Sep 26, 2011 5:09 am

OK, I've read a LOT of what's posted on this site and added a few thoughts of my own. However, as I read others' posts, I can't help but feel it would add a lot to the conversation if we all knew WHY someone was posting. To be honest, I am most interested in Reit Wreck revealing his/her motive for all the research, time and effort put into this site. It appears to be a MAJOR undertaking that I know I would only do for a business-related endeavor, not for a "conversation" or to "out" and industry. But we all are motivated differently, so I don't want to speak for Reit Wreck - I'd like to hear from him on what he does for a living and why this site and all the time/effort.

It would be great if all who post add their "reasons" to this thread for clarity for all to see. Nothing wrong with having a "motive", we ALL do.

So, I'll start. I am a fairly recent shareholder of Behringer Harvard Multi-Family REIT. I posted here to get informed feedback on BHMF and also asked some questions about Cole Credit III as I am also interested in that one. I wholeheatedly agree with those who say MOST non-traded REITs will have a tough time overcoming the expenses, loads, etc. as well as the ponzi-type distributions many of them make. However, with the right buying environment (2009-2011) I do think they may have enough tailwind to overcome the many issues IF they really bought a good % of their properties for a true bargain - a large bargain. If not, then I don't see how they do well on the back-end liquidity/listing or whatever.

So, there's my REIT story". A non-0traded REIT investor, somewhat concerned but wanting to discuss on a product by product basis.

Next!?!?!??!!!

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REIT Wrecks
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Re: Let's ALL come clean on "motives". Investors and advisor

Post by REIT Wrecks » Tue Sep 27, 2011 11:00 am

Real Estate Guy, welcome, and thanks for posting. My motivation is to sell out to [url=http://www.reisa.org/sections/about.php]REISA[/url] and the [url=https://www.ipa.com/about/who-is-ipa]IPA[/url] for $10 million. :D

In all sincerity, I did write an introductory post with some of my background and motivations here:

http://www.reitwrecks.com/forum/viewtopic.php?f=2&t=1" onclick="window.open(this.href);return false;

I have also been "outed" personally in several posts here by sponsors who thought my anonymity mattered to me. If you poke around some, you'll see those acrimonious posts accusing me of all sorts of ignorance and unsound business practices. I left those posts as is because I have absolutely nothing to be ashamed of.

The unvarnished truth is that I began this site in 2008 as a result of the credit crisis, and the disaster that ensued with publicly-traded REITs. I was also curious about how the internet worked. The evolving focus on Non Traded REITs was mostly just an accident, as described in the post above. I do like to write about other topics related to commercial real estate, but I've been very busy lately and have not had as much time to post on the main blog. I hope to get back to that activity soon though, possibly in the next several weeks. My day job revolves around managing investments in multi-family real estate, mostly in the midwest, but I have broad experience in property management, investment management, loan underwriting & pricing, credit analysis, loan sales and syndications, private placements, asset management, tax structured finance, and securitization -- across multiple asset classes.

There is no "plan" for REIT Wrecks. If there is a theme however, it would definitely involve proper alignment of interests between sponsor and investor. Put simply, the sponsors in the non-traded REIT world make their money by raising money and spending it, not by making successful investments. If they are not paid to make successful investments, guess what? Chances are investors won't be successful either, even if the investments were made in a "down" market. On the contrary, you will find all sorts of gimmicks that are designed to make the money raising process easier and quicker, like educational seminars in the bahamas (please, bring your wife and girlfriends!), inflated "dividends" that are paid simply by returning investors' own money, opaque valuations provided by unidentified "independent" third parties, and 7% commissions paid to middlemen for shoveling this stuff out the back door. And let's not forget those 2% acquisition fees (conveniently left out of the definition of MFFO), and the fact that 99% of these sponsors refuse to eat their own cooking.

Here's what the SEC recently had to say about the MFFO issue (related to a recent registration from ARC):
SEC wrote:We note your disclosure that MFFO provides useful supplemental information that is comparable with other companies that do not currently engage in acquisition activities.

Please provide more detailed disclosure on why a comparison to companies that do not currently engage in acquisition activities is useful to investors given that a key aspect of your business strategy is to acquire assets.

Source: [url=http://www.sec.gov/Archives/edgar/data/1507385/000000000011037761/filename1.pdf]SEC letter to ARC, question #2[/url]
Isn't that beautiful?

In the end, this theme and this blog is a profitless passion of mine, but I do get a lot of encouragement from many quarters, and I've met a lot of interesting people. I also share your belief that there must eventually be an as yet unseen opportunity for investors here. Aside from these rather small bits of gratification, however, there isn't much in it for me, except that I like to write. Perhaps this will all lead to fame and fortune someday, but I doubt it. More likely that not, it will simply lead to some very narrow form of notoriety in return for being one of many, many catalysts for change in this business.

crabsofsteel
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Joined: Sat Mar 06, 2010 6:56 am

Re: Let's ALL come clean on "motives". Investors and advisor

Post by crabsofsteel » Tue Sep 27, 2011 6:04 pm

I don't come from the commercial real estate underwriting / valuation side, but instead from the world of CMBS where 200-300 loans get pooled, and time-tranched debt service payments are sold to investors. There are a boatload of stories in the 200-300 loans, not necessarily disclosed in the offering docs which typically focus on only the top 10 loans in a transaction. One particular story has to do with non-traded REITS (including Behringer Harvard) and how they are leveraging themselves up with debt in CMBS in order to acquire a max of CRE in the shortest time possible. Other examples: Cole and Hines and Inland. This is why I find this site of interest, and much appreciate RW for sharing his well-founded skepticism. It seems they don't allow retail investors to cash out easily, and borrow on top of their equity (diminished by fees) for 5 or 10 years. Everything is indeed legal and disclosed. Yet, retail investors surely think their shares are liquid, even though they aren't. They can only be redeemed by either sale of the CRE (with penalties) or using other investors money. CRE mortgages, unlike residential, are locked out and can only prepay under onerous terms. So you might be investing for a longer term than you thought.

Marvin
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Joined: Mon May 09, 2011 6:52 pm

Re: Let's ALL come clean on "motives". Investors and advisor

Post by Marvin » Thu Sep 29, 2011 12:15 pm

I work for the CNBC show American Greed and I am doing research. :lol:

twincitiesmgr
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Joined: Sat Jun 16, 2012 5:56 pm

Re: Let's ALL come clean on "motives". Investors and advisor

Post by twincitiesmgr » Tue Jun 26, 2012 8:07 pm

Online exposure. This is an excellent marketing tool for me that cuts off the cost of other advertisement methods.

tripropertymgr
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Joined: Wed Jun 20, 2012 10:05 pm

Re: Let's ALL come clean on "motives". Investors and advisor

Post by tripropertymgr » Wed Jun 27, 2012 11:42 pm

I get significant details on others' real life experiences that I could apply or avoid.

harrychanning
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Joined: Mon Dec 30, 2013 10:58 pm

Re: Let's ALL come clean on "motives". Investors and advisor

Post by harrychanning » Mon Dec 30, 2013 11:00 pm

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harrychanning
Posts: 3
Joined: Mon Dec 30, 2013 10:58 pm

Re: Let's ALL come clean on "motives". Investors and advisor

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harrychanning
Posts: 3
Joined: Mon Dec 30, 2013 10:58 pm

Re: Let's ALL come clean on "motives". Investors and advisor

Post by harrychanning » Mon Mar 14, 2016 2:14 am

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