Former Inland Western IPO pricing this week

Former Inland Western IPO pricing this week

Postby ddo2 » Mon Apr 02, 2012 7:52 am

FYI: The "Retail Properties of America" fka Inland Western REIT is to price this week. Range of $10-12.

Can't wait to be able to put a final value on their crap.

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Re: Former Inland Western IPO pricing this week

Postby ddo2 » Wed Apr 04, 2012 10:37 am

Pricing is set for tomorrow (Thursday). with an $11 mid-range, that puts the actual value of the pre split shares at about $4.40. Only a buck less than their stated value. Nice.

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Re: Former Inland Western IPO pricing this week

Postby CREInvestor1 » Thu Apr 05, 2012 5:11 am

IPO was priced at $8.00/share, or a pre-split adjusted value of $3.20/share. The stock trades under the symbol RPAI.

Inland vaporized more than $3 billion in investor equity in this fund through poor investment, excessive fees, an abusive internalization, and over distribution.

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Re: Former Inland Western IPO pricing this week

Postby ddo2 » Thu Apr 05, 2012 6:52 am

Current'y (about an hour into trading) about 8.70. Slowly climbing most of the morning. Related to the over distribution problem, I was doing my taxes and noted that much of their "dividends" have actually been returns of caputal. Second year in a row that is the case.

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Re: Former Inland Western IPO pricing this week

Postby REIT Wrecks » Thu Apr 05, 2012 7:46 am

The return of capital component also consists of your share of depreciation and amortization, so it's not as bad as it looks your 1099, BUT there's no question, by any measure, that Inland almost fatally overpaid the dividend. I believe that this concept is too abstract for many shareholders to understand -- until today that is.

Did anyone see the letter to shareholders?? Here is a link:

http://www.sec.gov/Archives/edgar/data/ ... dex991.htm

In the letter, Inland wrote: "The real estate market was severely impacted by the economic recession and still has not fully recovered. It is uncertain as to if, and when, we will see a full recovery."

A number of non-traded REITs are blaming their portfolio, earnings and valuation issues on the recession, but these excuses ignore the real problem, which is the flawed NTR business model. Not only do NTRs employ a completely poisonous dividend policy, but the sponsors make most of their money by raising capital and deploying capital, not through investment returns. This means that NTRs raise and deploy capital regardless of whether raising capital and deploying capital makes any sense. Too often, the result is that Non-Traded REITs buy inferior assets at inflated prices, and at the wrong time in the cycle. More than anything else, I think this is what's being reflected in the opening price of RPAI.

And how about those ERISA valuations??!

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Re: Former Inland Western IPO pricing this week

Postby ddo2 » Thu Apr 05, 2012 8:17 am

I think the investors - at least those of us paying attention - knew the dividend was a joke, but it's a question of degree. Why it had any dividend at all in 2008 and 2009 is beyond me given the market conditions. Sure, they got hurt, through no fault of their own, by the bankruptcies of several large retailers which hurt rents and occupancy. but, the 10 to 1 split (as compared the initial 4 to 1 proposal) was clear indication that this was going to go badly, but that it is at a $3.50ish range now after years of urging investors to turn down secondary market offers that weren't much worse, is pretty grating.

Is the whole model awful? That's hard to say. There are those who think mutual funds are horrible investments because of the fees associated with some of them. In theory any managed portfolio of assets, be it a set of equity (M.F.) or Real Estate (REIT) or whatever, will have management costs. The trick to disntinguish a good investment from a bad one is whether the costs can be justified by the returns. Clearly, in this instance for Inland Western/RPAI, the answer is no.

Of course, I'm sort of at a quandry: do I sell this piece of crap in the short term now? I don't need the income, I could take the value and invest it elsewhere, but is it worth realizing all the losses? I'll need to think that through when a realistic range of the stock in the longer term becomes clear.

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Re: Former Inland Western IPO pricing this week

Postby CREInvestor1 » Sun Apr 15, 2012 7:10 am

Many of the private REITs blame investment timing and the financial crisis for their poor investment performance. This ignores 2 significant facts. 1) not all real estate funds destroyed themselves over the past 5 years 2) based upon most independent research, the commercial real estate market has recovered a significant amount of the value lost in 2008-2009 thanks to exceptionally low interest rates and accommodative monetary policy from the fed. These vehicles lost investor capital by poor investment selection, an abusive fee structure, and in Inland's case a redemption plan that chronically overpaid for shares.

Private REITs fees are far too high, and the illiquidity makes them inappropriate for many investors, but the real problem with the industry is that most of the sponsors are not investors but stock promoters. Take a look at who manages these vehicles - these are not investment organizations. Sponsors are paid to raise money and invest it in buildings that look pretty in a brochure. Sponsors don't invest in their own funds and they don't have a financial incentive to perform. Blaming losses on "market conditions" ignores what really happened to these funds. Do the math and you will see that only $7/share of IW went into real estate. Chronic over distribution, high fees, a massive internalization and years of redeeming shares at well above their actual value and you have a fund that lost a significant amount of NAV regardless of what happened to the value of the underlying assets. IW also suffered from several large tenant bankruptcies which certainly contributed to the losses, but this outcome is not due to some exogenous "market downturn" that they were blindsided by.

investing well below their cost of capital and masking it with distributions that had little to do with the cash flows of the underlying portfolio is poor fund management decision making not market conditions.

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Re: Former Inland Western IPO pricing this week

Postby newtogame » Thu Jul 19, 2012 6:07 pm

im trying to come to terms with the fact of money loss. the question remains ...do i sell the class b shares when they become public? or ride the storm like i have for the past 8 yrs? will be rolling my class a to an ira then to my 401k where its making money. i asked my adviser the other day what happened.he says to me we all lost money.thoughts?

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Re: Former Inland Western IPO pricing this week

Postby abby741 » Tue Jan 21, 2014 11:37 pm

Inland vaporized more than $3 billion in investor equity in this fund through poor investment, excessive fees, an abusive internalization, and over distribution.

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Re: Former Inland Western IPO pricing this week

Postby mikelafrench » Sun Mar 23, 2014 9:08 am

In a victory for shareholders, the Inland American revealed that it would not pay an internalization fee to insiders in connection with becoming a self-managed REIT. The Trust, however, is now offering to buy back shares for less than its estimated share value announced just two months ago. If the Trust estimates the share price to be $6.94, why is it offering to buy back shares for as little as $6.10/share? Find out more at: http://www.inlandinvestoralert.org

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