Saturday, May 11, 2013

REIT a Misrepresented and Bad Investment?






Along with many others it is my opinion that prospective investors proceed with extreme caution when considering or presented with a non-traded REIT investment proposal.

Non traded or traded REIT’s are basically a real estate investment trust that have pooled the capital of investors into various forms of  income producing properties structured to regularly generate and distribute cash by unit investors. 
 
All speculative investments including a REIT require that investors be extremely careful as in buyer beware and do there due diligence

Canadian companies most recently Canadian Tire and Loblaws have jumped on the REIT bandwagon to unlock the literally BILLIONS of asset dollars of their property holdings!  

In my opinion these investments are similar to mortgage backed securities. And one draw back among others is that once pooled it is conceivable that a company’s most valuable  owned real estate properties could be left out of a REIT through lack of regulatory, bureaucratic and directors oversight that could enrich opportunistic financial institutions, traders, lawyer and politicians?

As values of the real asset, in a traded or non-traded real estate investment trust even though they supposedly are of a “high quality and in a strategic location,” have been so accredited for their asset values and unit price by the very corporations creating the REIT?  

And then conceivably further endorsed or given a worthy investment rating value by the same financial institutions who are marketing these securities to investors through stock exchanges controlled by the appropriate provincial securities commission.

Who have conceivably acknowledged and confirmed that all of the criteria for regulatory and director approvals have been met for all REIT IPO’s for marketing purposes for those investors looking for a higher rate of return or a way to hopefully secure income amidst the erratic market and current prolonged low interest rate conditions.

Please read more of Peter Beck’s and Simon Romano’s
Canadian Income Funds @

Up Date

http://www.thestar.com/business/real_estate/2013/05/13/jim_flaherty_says_real_estate_trust_wave_is_not_a_concern.html

"REITs, which receive preferential tax treatment from the government, are companies that invest in income-producing real estate and pay out most of their income to investors through unit distributions. They have raised $760 million from six Canadian IPOs this year, including Milestone Apartments REIT and Agellan Commercial REIT, to account for 74 per cent of $1.03 billion raised from initial offerings this year in the country, data compiled by Bloomberg show."

"Canadian REITs raised almost $500 million in seven IPOs last year, more than any other industry in Canada, the data show. The Standard & Poor’s/TSX Capped REIT Index soared 165 per cent from a five-year low on March 9, 2009 through May 10. The benchmark S&P/TSX Composite index rose 66 per cent over the same period."

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Thanks for your thoughts, comments and opinions, will be in touch. Peter Clarke