Cole REIT Redemption Flip Flop: Are Some Investors Special?

We did not have sex with that Pension Board!

Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby REIT Wrecks » Mon May 10, 2010 8:59 pm

The Cole REIT III prospectus needs to be rewritten, because it doesn't fully disclose what happens when Cole's numerous conflicts of interest are combined with a ridiculously under-qualified board of trustees in West Warwick, institutional advisors whose approval cannot be bought, and the Providence Journal.

Last week, in a truly extraordinary move [for background, please see Cole REIT III "Wholly Inappropriate" Says Advisor], Cole offered to repay the town of West Warwick in full, effectively waiving its redemption policy without even being asked. And this evening, in a meeting with "lots of fireworks" the town voted to take it back - in full. Why is West Warwick so special? Could it be the mounds of bad press being churned out by the Providence Journal?

The Cole REIT III prospectus says that Cole may waive the redemption policy "due to a stockholder’s death or bankruptcy or other exigent circumstances," upon request. Is it true that Cole is now offering to refund everyone's money without even being asked? Or is Cole just a cat caught in a litterbox? Are there any shareholders out there that care to ask these questions, especially now that "exigent circumstances" is understood to include the simple acts of being stupid and uninformed?

Cole's written offer to refund the investment is interesting. It suggests the linguistic agility of Bill Clinton, absent the agility. It's possible, boys and girls, that the Executive Vice President & General Counsel actually inhales. The letter expends two full paragraphs in an attack upon the character and record of a fiduciary representing clients with over $30 billion under management, conveniently neglects to address any of the issues on their merits, and emerges six paragraphs later with its grammatical tongue curiously forked twisted:

issues raised regarding the decision by the Board to make this investment, including allegations of relationships between the independent broker who introduced the Board to this investment opportunity, on the one hand, and present and former Board members who made the decision, on the other - allegations of which we are unfamiliar with the underlying facts - have created a unique circumstance that would justify a redemption


Huh??


Does_Anyone_Have_A_Flashlight_There_Are_Roaches_Here.jpg
I did not have sex with that Pension Board!
Does_Anyone_Have_A_Flashlight_There_Are_Roaches_Here.jpg (304.8 KiB) Viewed 15255 times


Given these events, the prospectus that I read clearly does not disclose Cole's actual policy. In addition to all investors with "exigent circumstances," Cole now seems to be saying that any investor with "a unique circumstance" can redeem their shares without penalty. Sadly, the only unique and exigent circumstances in this case happened to be two institutional financial advisors that had a fiduciary duty to act in the best interests of their client, and they refused to buy Cole's bag of tricks.

And what about P-Solve, the fiduciary that resigned rather than allow itself to be associated with the town's decision to "invest" in Cole REIT III? The Townsend Group, a pension consulting firm that specializes in real estate and advises 85 clients with over $100 billion of real estate allocations, said that P-Solve's negative recommendation of Cole REIT III was "accurate, appropriate and should have been heeded".

The Townsend Group is one of the largest - if not the largest - real estate pension consultants in the business. Their review, commissioned by the state employee retirement system, echoed the very same concerns raised by P-Solve, including Cole's "material" conflicts of interest, its "punitive fee structure" and illiquidity which results in "no immediately determinable value".

Townsend also cited "disturbing trends" in other Cole programs such as "paying current investors dividends based on significant borrowings and equity raised from new investors." This - in case you were wondering - is the very definition of a Ponzi scheme. The only difference here is that it's all disclosed up front, so that makes it OK. :roll: The results of Townsend's review are not at all surprising; what is surprising is why any broker would ever recommend such an investment to their clients:

Townsend_Memo.jpg
On Cole's acquisition strategy: "The advisor likely seeks lower quality markets to satisfy yield requirements to its investors after the large up -front costs had been borne by the investors."
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Townsend also said that its review of prior programs revealed "inadequate" valuation processes, noting that most of the properties are held at or near cost, despite being acquired at the top of the market. Townsend believes that the value of Cole's portfolio is likely to have dropped by at least 40% since then.

Like everything else in this incredible cesspool, does that reflect simple inadequacy - or purposeful and deliberate deceit?
:roll:

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby sourgrapes » Tue May 11, 2010 10:25 am

John Cona, you are a sad little man. Can't get ahead at Cole, so why not start a blog to promote your own crappy deal. TARP-capital.com was started by a Cole reject.

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Speci

Postby REIT Wrecks » Tue May 11, 2010 11:50 am

After carefully scrutinizing every letter of every sentence in the above post, I can confirm that John Cona's physical stature and career status are not the topics. John Cona, whoever he is, is not even mentioned.

* Fear dictates the marketplace
* What those understand least they fear most
* The market's fear, and our knowledge, is our opportunity
* Acquisition underwriting standards must rise to the highest
level, and we must educate our investment committee better

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Speci

Postby losemoneynow » Tue May 11, 2010 9:14 pm

Is sourgrapes suggesting that John Cona is writing these pieces on the Cole REITs?

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby REIT Wrecks » Wed May 12, 2010 2:43 am

That is exactly what sourgrapes is suggesting. However, unless sourgrapes is over 6'2", then I am not a little man!

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby jam3 » Wed May 12, 2010 11:36 am

Well....who are you? Are you hiding behind a cute little name on a blog?

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Speci

Postby REIT Wrecks » Wed May 12, 2010 12:35 pm

jam3 wrote:Well....who are you?


I am the sling-shot man!


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Re: Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby losemoneynow » Wed May 12, 2010 4:34 pm

Hey REIT Wrecks,

Do you think the sling-shot man has a good percentage of his retirment income tied up in these ultra safe, very stable non-traded REITs?

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Speci

Postby REIT Wrecks » Wed May 12, 2010 5:08 pm

Well, let's see...he grew up poor, one of 13 children, only one shotgun in the house, and he still doesn't have a TV or a telephone, so yes, non-traded REITs would ABSOLUTELY be suitable!!

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Re: Cole REIT Redemption Flip Flop: Are Some Investors Special?

Postby 4ever stamp investr » Wed May 12, 2010 8:26 pm

To provide the financial advisor and broker dealer networks a narcotic to soothe the pain of placing client money into these products, I am now raising a forever stamp fund. The load is 18% and we will be leveraging our $2B of equity 2 to 1. I think that 8% upfront that goes to me will buy me some cool toys - G5, perhaps an island (or two) and a giant legal retainer. With the fed printing presses running a third shift, buy into the ultimate inflation hedge! The annual asset management fee of 1% of equity is only $20 million - just enough to pay my park avenue overhead (gotta keep several billion stamps pampered) jet fuel and some much needed D&O insurance. Peace, see you on the Forbes 400.

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