Wells Timberland REIT Inc. has recently issued an estimated per share value of $6.56 in their real estate investment trust (REIT), which invests in working timberland. The shares were offered to the public at $10 when the REIT was launched in 2006. Wells Timberland blamed the 35 percent drop in share price value on the still-dismal housing industry. Wells Timberland REIT is sponsored by Wells Real Estate Funds, one of the largest firms in the arena of non-traded REITs. It has invested more than $11 billion in real estate for more than 300,000 investors. The $6.56 share price valuation was based on information as of September 30, 2012, which in all probability is not a realistic exit price available to investors due to the illiquid nature of the REIT.
REITs invest in a diversified set of income producing real estate properties and mortgages, and they must distribute 90 percent of net earnings to investors. REITs allow investors to partake in real estate investing without directly owning property, which may lock up large amounts of money for longs periods of time. The most popular REITs are publicly traded on a stock exchange such as the New York Stock Exchange (NYSE) - they are relatively transparent in their finances and operations and are covered extensively by investment analysts. Non-traded REITs are not listed or registered with securities regulators and are supposed to be available only to accredited investors - $1 million or more in assets or $200,000.00 in annual income. Non-traded REITs disclose their finances publicly and offer shares to the public, but they do not list their shares on an exchange, which is one of many risk factor associated with them.
Wells Timberland's 8-K filing with the Securities and Exchange Commission lists timber assets of $11.70 per share, $0.28 of other assets per share, and debt and preferred equity liabilities of $5.42. Although the board of directors used appraisal information from a forest consulting firm and a certified public accountant, it made the final estimate itself. In October, the trust suspended redemptions of shares until the new estimate of share values was completed. Beginning in January, investors will be able to redeem shares for 95% of the estimated value - or $6.23. However, Wells Timberland pays for redemptions out of its distribution reinvestment plan, and because it has made no cash distributions, it has also not made any ordinary share redemptions.
Have you suffered losses in the Wells Timberland REIT? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.