IWST registration

IWST registration

Postby ddo2 » Fri Mar 04, 2011 2:52 pm

Has anyone read the S-11 filing they made? (I want to thank my broker for mentioning this rather than me having to happen upon it.) I have it on a zip drive, but I really wasn't keen on reading the whole thing as beach reading, especially since its 45 degrees here.

From my perusal of the summary, it looks like they will do a reverse split, and create three classes of B stock (B-1,2,3), so If I'm reading it right, I think what they hope to do is that existing shareholders will end up with, say 1/4 of the Class A shares they have now, then issue $350 million in new shares of class A which will be freely traded. (And worth much more than $6.85 they say now. :lol:) The Class B shares look to be non-traded, so presumably they will be converted to A or traded as a separate class later.

Anyway, like I said I really was hoping to avoid reading the whole thing, but if anyone else has made it through, or wants to highlight interesting portions, please speak up.

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Re: IWST registration

Postby ddo2 » Fri Mar 04, 2011 3:01 pm

Small update: I got the B share conversion rights, and sure enough they automatically convert in tranches at times TBD, to A. So, theoretically you get 1 share of each class for each share you have now, and then cut you current shares to 1/4 of what you have (all these numbers are missing in the draft, of course), and then over time you can sell them.

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Re: IWST registration

Postby REIT Wrecks » Sun Mar 13, 2011 6:59 pm

ddo2, you are correct, and Inland Western is following the same reverse split/partial liquidity plan that was used by Piedmont/Wells REIT I. I read the Inland Western S-11, and as you noted, the darn numbers are all missing from the draft, but even without the numbers, it's apparent that Inland Western intends to do a reverse split (probably on a 3 for 1 or 4 for 1 basis) such that your pro-rata ownership in the company will not change, but it will be evidenced by fewer shares, each worth **le voila!** more than the original $10/share you paid (solely on a per share basis).

But make no mistake: Inland Western reported 478.9 million shares of common stock outstanding as of January 27, 2011 (pre-split), and annualized 2010 FFO/share of approximately .26 per share (based on IWST's 2010 Q3 results). This means --- assuming an FFO multiple of 17.4x --- that existing IWST stock is worth about $4.55 per share, and whether you have 10,000 shares worth $4.55 now, or 2,500 shares worth $18.20 later (assumes a 4 for 1 split), you'd still have only $45,500 worth of stock.

Sadly, this valuation may be somewhat generous. The 17.4x FFO multiple used in the above valuation estimate is the average actual FFO multiple over the past eight years for a variety of publicly-traded shopping center/retail REITs like Kimco Realty Trust, Agree Realty, Weingarten Realty, Ramco Gershenson, and so on. However, if one were to use the actual 2010 FFO multiple from Developers Diversified Realty (13.4x), you would wind up with a value of $3.51 per share (see What are Inland Western Shares Really Worth?). Not surprisingly, this is about where Inland Western shares are trading on the very informal (and very fragmented) secondary market for non-traded REITs.

Regardless of what the shares are actually worth, you would not be able to sell them immediately. Only a portion of your "B" shares would convert to the publicly traded "A" shares on the IPO date. The rest would convert over time, probably 20-25% of your holdings at a clip, quarterly, over a period of 12-18 months. Therefore, unless you choose to wait until all of your B shares convert, your broker will have to sell the IWST shares in at least three or four separate transactions (and earn a commishky on each trade, which is a very nice thank you for getting you into this money losing mess in the first place...)

Anyway, we will obviously see what happens. Good luck to you ddo2; this will be an interesting IPO, and I will be very curious to see how it unfolds.

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Re: IWST registration

Postby ddo2 » Thu Apr 07, 2011 10:59 am

I'm curious if this IPO actually happens. The IPO market has been pretty bad and a fair number of them have failed to actually close. Market for new money isn't that great right now.

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