Nontraded REIT Share Online Auctions – Update on July 2016 Article
Published October 4, 2016 | by James Sprow | Blue Vault
After the publication (published July 18, 2016) of our recent Insights article on auction sites for nontraded REIT shares, we received requests for more information about other options for investors. We have updated our listing to include several other potential contacts for investors seeking competitive pricing for shares in secondary markets. These companies include a new online auction site (CFX Markets), as well as other companies that act as intermediaries between shareholders and potential buyers.
Also included in this list are two companies that engage in third-party tender offers to shareholders in nontraded REITs. Tender offers may be made directly to shareholders if the tendering company obtains a roster of names of all shareholders from the REIT (such provisions are included in bylaws and charters of some companies) or by filing a registered tender offer with the SEC.
We have included in our listings a note that refers to affiliated registered brokers, where applicable, which can be researched at http://brokercheck.finra.org/, a useful resource for investors wishing to find more information about both broker dealers and financial advisors.
These listings are not in any particular order and have not been evaluated or vetted by Blue Vault. The contacts are provided as a resource for investors and financial advisers without any recommendations or endorsements by Blue Vault. Investors are urged to research and compare the various methods and pricing these firms provide before offering shares for sale. Investors are also urged to use the SEC’s website at www.sec.gov to monitor the filings and announcements by nontraded REITs regarding plans for portfolio liquidations, mergers, or listings of the REIT’s shares.
We must emphasize any alternative source of liquidity for nontraded REIT shares will involve transaction costs, and more importantly, prices received will be at a discount to reported share values (NAVs) and the redemption prices which the REITs with active share repurchase programs are offering. The sale of nontraded REIT shares in secondary markets by shareholders should only be considered after evaluating alternatives including the REIT’s repurchase policies, and becoming informed about the prices offered the transaction costs, and the time required to complete the sale and receive funds.
Secondary Markets for NTR Shares
Central Trade and Transfer (CTT): www.CTTAuctions.com
(a subsidiary of a registered brokerage firm, Orchard Securities, LLC)
CTT began auction activities in early 2011 and is a branch office of Orchard Securities, LLC, located in Lehi, Utah. A listing agreement allows sellers to set a reserve price and an auction listing lasts for three business days. A history of past auctions of shares for a particular REIT is available upon request, and CTT can recommend a reserve price based upon past transaction history. After the high bidder is determined, the sale is cleared through the designated transfer agent for the REIT. When an auction is complete, the buyer transfers funds that are placed in escrow until the title to shares is transferred. Typical times from the auction ending to transfer date have been two to four weeks. In early 2015, CTT acquired American Partnership Board. At the time of the acquisition CTT and APB accounted for more than 65% of all secondary market trades by dollar volume, and that market share has reportedly increased.
On September 29, 2016, open auctions for the following nontraded REITs were available:
- United Development Funding III
- Highlands REIT
- InvenTrust Properties
- CNL Lifestyle Properties, Inc.
CFX Markets: https://cfxinvesting.com
(CFXInvesting.com is a website operated by CFX Direct, LLC. Securities are offered through Sageworks Capital, Inc., an affiliated entity and a registered broker-dealer and member FINRA/SIPC.)
CFX Markets, a secondary market for alternative assets, announced July 26, 2016, that its online market at cfxinvestig.com is open to the public, providing investors the opportunity to buy and sell shares of alternative assets, including public non-traded REITs, BDCs and Regulation A+ crowdfunding offerings.
The CFX Markets portal acts as a trading platform for alternative assets, allowing investors to buy and sell shares from other participants in the market (subject to SEC resale restrictions). Investors seeking to buy or sell shares of alternative assets go to CFXinvesting.com and register for a CFX account. By authenticating their identity on the CFX platform, investors can begin listing assets for sale or bidding on listed assets on the platform. Interested buyers can review listed assets and offers, along with historical financial data on each asset, before posting bids to buy listed assets.
On September 29, 2016, the auctions for the following nontraded REITs were on the CFX website:
- InvenTrust Properties
- Highlands REIT
- Behringer Harvard Opportunity REIT I, Inc.
- KBS Strategic Opportunity REIT II, Inc.
- First Capital Real Estate Trust
Investors interested in buying or selling shares of alternative assets may register at CFXinvesting.com. Alternative asset issuers and portals interested in working with CFX Markets may contact the corporate office at cfxinvesting.com or at 646-883-2396 for more information.
Contact Information
Jordan Fishfeld
CFX Markets
646-883-2396
REITbid: www.reitbid.com
(not a registered Broker Dealer)
REITbid and FRE.com partnered in 2011 to create an auction site just for nontraded REIT shares.
An investor wishing to sell nontraded REIT shares fills out a form online with the REIT name, number of shares, a copy of the last statement and anticipated reserve price. Once ownership of the shares is confirmed, transfer documents are prepared and the auction is displayed on the REITbid.com website and is open for bidding. Buyers who have expressed an interest in the REIT shares are notified of the auction start date. At the end of the auction, the highest bidder meeting the reserve price becomes the buyer and transfer documents are executed by buyer and seller, with purchase monies sent to the clearing firm. Completed transfer documents are processed by the REIT, the seller receives confirmation and funds are distributed to the seller.
Jeff LaDouceur and Alisha A. Lange
Phone: 1-800-494-7600 and 1-949-706-6129
Newport Beach, CA
Signal Securities: www.SignalSecurities.com
(Registered Broker Dealer and Financial Adviser)
Signal Securities Inc. and Jack Ryngler have been active participants in the Secondary Market for NT REITs for over 20 years. The company will quote a net price to the seller less a $40.00 escrow fee. The company does not put out a bid to sellers unless it has a buyer, and buyers are usually parties with whom Signal Securities has past transaction experience. Due to the time lags involved in completing sales, all offers are on a best efforts basis and either party can break the sale, meaning the sales are essentially limit orders.
Jack Ryngler
Signal Securities, Inc.
Toll Free: 855-NTREITS (687-3487)
Phone: 818-591-3707
Fax: 818-591-3710
Email: Jryngler@SignalSecurities.com
22287 Mulholland Hwy., #407
Calabasas, CA 91302
Advantage Partnership Board: www.sell-lpz.com
(a branch office of a registered brokerage firm, Orchard Securities LLC)
Advantage Partnership Board is an online listing service for illiquid securities. It offers a full range of services for investors seeking liquidity or investment opportunities in secondary limited partnerships and other illiquid securities.
Sellers contact APB for indications and current market pricing. Once the seller has agreed to a minimum net price and signed an “intent to sell” agreement their shares are listed for four days. Buyers can submit bids via e-mail, phone or fax. At 12:00pm EST on the day of expiration of the listing the units or shares are awarded to the highest bidder. Contracts are then forwarded to buyers and sellers. Upon receipt of both sets of contracts the buyer’s funds are deposited in an escrow account and the necessary documents are forwarded to the transfer agent or general partner for transfer approval. Once approved the buyer’s funds are released from escrow and forwarded to the seller along with trade confirmations.
Primary location:
1776 Park Avenue, #4 – 353
Park City, UT 84060
Phone: 435-649-8025
Email: sgillett@sell-lpz.com
Alliance Partnership Services: www.alliancetradingdesk.com
(not a registered Broker Dealer)
Alliance Partnership Services matches buyers and sellers of limited partnerships and REITs. The firm handles all of the necessary paperwork to accomplish the transfer process. REITs and partnerships may be listed on the site and are provided for informational purposes only and do not constitute an offer to buy or sell securities.
www.alliancetradingdesk.com
1160 Brickyard Cove Road, Suite 106
Point Richmond, CA 94801
Trading Desk: 800-990-5604
Customer Service: 800-898-8109
Fax: 510-235-9539
Office Hours: 8:00am to 4:30pm PST
For a list of available units, or to see the price they can sell shares for, call the Trading Desk at 800-990-5604.
Two Firms that Engage in Third-Party Tender Offers for Nontraded REIT Shares
MacKenzie Capital Management, LP: www.mackenziecapital.com
(not a registered broker dealer with FINRA)
Based in Moraga, California, MacKenzie Capital has specialized in the area of discounted real estate securities and asset management since its formation in 1982.
List of Recent Tender Offers
- Apple REIT Ten, Inc., $9.21 per share, Expired August 19, 2016, 124,099 shares tendered
- InvenTrust Properties Corp., $1.25 per share, Expired September 23, 2016
- Healthcare Trust, Inc., $14.00 per share, Expired September 29, 2016
- KBS Strategic Opportunity REIT, Inc., $8.00 per share, Expires October 31, 2016
Email: offers@mackenziecapital.com
Phone: 800-854-8357
CMG Partners: www.cmginvestments.com
(not a registered broker dealer with FINRA)
CMG Partners, LLC, is organized as a limited liability company in the State of Washington. It provides liquidity options for investors who own non-traded investments such as REITs, Limited Partnerships, and non-publicly traded stocks. CMG files third-party tender offers to buy nontraded REIT shares. Shareholders can respond to the tender offers. Once CMG has all of the required signatures and documents needed from the investor, it usually takes approximately three to five weeks for the transfer to be completed. CMG pays within three business days of receiving a written confirmation from the transfer agent that the transfer to CMG is completed.
CMG recently offered to buy shares of KBS Real Estate Investment Trust II, Inc. for $3.30 per share. The offer expired July 13, 2016. CMG filed a report with the SEC on July 14, 2016, stating that the tender offer resulted in the tendering by shareholders and purchase of a total of approximately 263,882 shares.
CMG is also interested in, and frequently are buyers of the following securities:
- Behringer Harvard Opportunity REIT II, Inc.
- CNL Lifestyle Properties, Inc.
- Dividend Capital Diversified Property Fund Inc.
- Hines Real Estate Investment Trust, Inc.
- KBS Real Estate Investment Trust, Inc.
- Lightstone Value Plus Real Estate Investment Trust, Inc.
Contact:
CMG Partners, LLC
Phone: 425-376-0693
12828 Northrup Way, Suite #110
Bellevue, WA 98005
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