Non-traded REIT industry receives further guidance from the SEC

The SEC Division of Corporation Finance staff recently issued disclosure guidance related to sales materials for non-traded REITs (NTRs).  The guidance hits on all the major hot topics in the NTR space – distribution coverage, prior performance, redemption programs, and the relationship between share price and value. 

Due Diligence Lessons: Hedge Fund Edition

The SEC posted a press release on December 1, 2011 indicating it was charging multiple hedge fund managers with fraud following an inquiry targeting suspicious investment returns. 

Recent events related to MF Global reinforces need for independent due diligence

An editorial on MF Global in the Wall Street Journal today highlighted the need for strong independent due diligence regardless of whether a company or industry is “highly” regulated. In the wake of the collapse of MF Global, the public is struggling to understand how customer funds may be missing from a company that focused its business on managing accounts trading in the highly regulated futures markets. 

Positive move in valuation disclosure

On November 8, Wells REIT II reported on page 45 of its Form 10-Q an estimated value of its common stock of $7.47 per share, as of September 30, 2011.

Private placement proposal progresses

On October 18, the SEC published a notice of a proposal to adopt new FINRA Rule 5123, which relates to private placements of securities. 

Cap rate confusion

In the world of real estate investing, the “capitalization rate” is a key metric that can be used to estimate unlevered yield on a real estate investment and is generally understood to be the annual net operating income of the property, or NOI, on a cash basis, divided by the cost of the property. 

SEC sanctions audit engagement partner

On July 14, 2011, the SEC issued an order sanctioning and fining the audit engagement partner for anaccounting firm in connection with the firm’s issuance of unqualified audit opinions to a hedge fund client that had made materially false and misleading statements in its financial statements.

FINRA issues announcement regarding DPP/REIT account values

On July 15, FINRA posted a statement on its web site regarding a recent Board of Governors meeting, which addressed, among other things, possible amendments to the customer account statement rule. 

Inland Western announces new share valuation of $6.95

Inland Western Retail Real Estate Trust, Inc. filed a Form 8-K on June 20, 2011, reporting that on June 14, 2011, its board had established an estimated per-share value for its common stock of $6.95.

Hines REIT announces share value of $7.78 per share

According to a Form 8-K filed on May 26, 2011, on May 24 the board of directors of Hines Real Estate Investment Trust, Inc. (“Hines REIT”) established an estimated per share value of its common stock of $7.78; the previous estimated per share value was $10.08.