A $10 billion fund invested in commercial properties. Investors want out, but there is no cash left:
One of many businesses run on cheap money. Whatever Powell says it is more likely that rates will rise rather than fall given the massive deficit the USA is running.
SREIT is a “non-traded” REIT. These are one of the worst products Wall Street ever created - followed closely by any salesperson that pumps and dumps these to their clients for a fat commission.
Non-traded REITS are not required to honor redemption requests. You can only liquidate when they decide to honor the request. You basically have to die to get out of many of these.
I have even seen cases where people were sold these in an IRA - and they usually don’t even offer an RMD provision to get out of them.
Is there any private market for these? Seems like someone with deep pockets could buy the interests in a private sale. Get enough, and you might be able to gain control of the REIT and get better management. With the right target, there could be a good profit opportunity there.
—Peter
Many years ago I was involved in just such a thing. Turns out that the management of a REIT has way too much power and they did things to avoid being replaced. In the end, we, along with all the other shareholders, ended up losing almost all of our money (the shares are down 99.7% and we still hold them). Meanwhile, years later, the management is still entrenched, and still collecting handsome fees.
So while it is possible, it is likely to be very risky and improbable.
Yes, but…
I have a client that purchased one of these for $30 a share years ago and recently received an offer for $9.XX a share from a private company to take them off her hands. The REIT prices the shares at $16.XX a share.
That’s my point. The REIT might price them at 16, but if they won’t actually pay that, are they really worth 16?
It’s also my point that there could be a profit opportunity for someone with the ability to tie up some capital for a while.