Cole Real Estate Investments

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James Wind

Phoenix, AZ

#1 Dec 11, 2008
Has anyone ever worked with/invested with Cole Real Estate Investments?

http://www.colecapital.com/investment_opportu...

If so, would you mind sharing your thoughts and experiences?
Michael C

Canonsburg, PA

#2 Dec 21, 2008
I have about 13K in the Cole Capital REIT Property Trust II. It yields 7% annual dividend paid monthly and the share price is fixed at $10.00. Your dividends are reinvested at a cost of $9.50/shr, so if you reinvest dividends you get the DRIP shares at a discount. They have a very nice portfolio of single tenant Reatil spaces all throughout the country. I have had a good experience investing with them and will continue to buy additional shares over the years. They just started a third REIT I believe. The only downfall is that since it is private, it is fairly illiquid and it might be years before it goes public. If you have a time horizon of 7 -10 years or better and don't think you'll have to access the funds, I would recommend it.
Dan

Vancouver, WA

#3 Jun 3, 2009
Thanks Michael for the information.

But can anyone tell me what happens if Cole REIT 3 never goes public how can an investor ever cash out without penalty and loss of a portion of their investment and dividends reinvested (DRIP)?

It seems as though once a person invests in a private REIT they are locked in for decades for lack of buyers to sell to. And if you can not get your money out without a discounted loss you are stuck and have to wait about 11 years to get your investment back-that is, through receiving a 6.75% dividend earnings rate. Then it seems it would only be after 11 years that a person would begin to make 6.75%(plus or minus), in earnings.

So is a private REIT, only for those who want dividend earnings the rest of their life and are willing to give up access to their principal investment until they die? That they will have to die to get the full amount to their heirs?

Thanks for any comments.

Dan
Michael C wrote:
I have about 13K in the Cole Capital REIT Property Trust II. It yields 7% annual dividend paid monthly and the share price is fixed at $10.00. Your dividends are reinvested at a cost of $9.50/shr, so if you reinvest dividends you get the DRIP shares at a discount. They have a very nice portfolio of single tenant Reatil spaces all throughout the country. I have had a good experience investing with them and will continue to buy additional shares over the years. They just started a third REIT I believe. The only downfall is that since it is private, it is fairly illiquid and it might be years before it goes public. If you have a time horizon of 7 -10 years or better and don't think you'll have to access the funds, I would recommend it.
Concerned Shareholder

Huntsville, AL

#4 Sep 5, 2009
CCPT II in their 10Q as of June declared distributions of $69.9m and has FFO of $49m for a payout ratio of 143%.

How can a REIT invest in a Wallgreen stores at a 4-5% cap rate and pay out a 7% dividend. I would stay away from Chris Cole and all his investemtns - not a good organization. Just looking to take fees from investors and not a true real estate firm.
Curious

Baton Rouge, LA

#5 Sep 11, 2009
I wish we could get more people to reply on this topic. Good point concerned.
Dan

United States

#6 Sep 11, 2009
Does the CCPT III hold the share price at $10.00 per share forever unless it goes public? Is 6-7% ROI and the DRIP the best we can expect?

Also, does anyone by chance know who Cole III is buying property from?

Thanks
Concerned Shareholder

Huntsville, AL

#7 Oct 5, 2009
Dan wrote:
Does the CCPT III hold the share price at $10.00 per share forever unless it goes public? Is 6-7% ROI and the DRIP the best we can expect?
Also, does anyone by chance know who Cole III is buying property from?
Thanks
Dan,

The share price stays at $10 during the offering stage. Normally after the close of the offering is when you will see a fair price per share based on the true value of the assets.

Chris Cole has not had any Public REITs go full cycle, so there is no good track record to compare results. CCPT II raised money and paid a high dividend for investors - he closed the fund and cut the dividend. Does not make any sense for the investors.
Dan

Vancouver, WA

#8 Oct 5, 2009
Thanks Fackler,

Any idea what the investors in Cole III can expect as far as reasonable price per share value after 3 years assuming the market is healthy?

Also, my broker said that Cole III properties will be sold off after 5 years. Is this your understanding?

Appreciate any information you might have. Thanks.

Dan
John

Ann Arbor, MI

#9 Oct 15, 2009
If you don't understand the investment I would not comment. It is obvious that people making the prior comments have no idea what they are talking about or have an understanding of REIT's.

Consult with a professional
Dan

Woodburn, OR

#10 Oct 15, 2009
Dear John,

What is it that people posting on this thread ... "do not understand what they are talking about"? Would you please explain what you mean? And if you have the correct answers please share with us. Thank you.
Mark Bratek

Jacksonville, FL

#11 Oct 19, 2009
This is a more complex topic than should be explained on an internet forum. I am an investment advisor that specializes in REITs and other alternative investments. I can tell you thare are some outstanding REITs with a long track record out there. You should always use a good investment advisor to choose one. Also use a fiduciary as they are required by law to act in your best interest, not what is suitable. I usually reveiw multiple options with my clients that meet their objectives and then before investing introduce them to a fund officer either on a conference call or in person at lunch or dinner so that the client fully understand the product, process and exit strategies. If you are willing to put your life savings on the line through an internet forum you are crazy. Even if someone gives you an opinion it could not possible represent an acceptable sample pool and you could be misguided. If you need some free information I would be happy to help on a more personal level.
Mark
mydolfan@yahoo.com
Steve Lowther

Spring Hill, FL

#12 Oct 20, 2009
I have been an investment advisor and Registered Principal for more than 20 years. I began utilizing non-traded REITs and other alternative investments as a hedge against a highly speculative stock market (i.e. also todays market environment). I have never had an investor upset about the price stability or the dividend yields. It is only the liquidity that is an issue. Today, liquidity is the primary risk you face with these investments. Most investors do not mind the illiquidity because the yields are the highest available in the market today. The key with any alternative investment is that you don't put more than 10-15 % in this sector and even then, you spread it around amongst several issues. There are plenty of sponsors in this sector from which to choose (Inland, Hines, Wells, Thompson, Dividend Capital, Coles, etc.) Track record is key - although in this current environment, where there have major bankruptcies in the retail sector like Circuit City, Linens and Things, Bombay), track record means nothing when the owners of the properties need to conserve cash because of vacancies and renegotiations. A decline in the dividend, while painful to the investor, will be much rewarded when the liquidity event occurs and the sponsor has been able to use the cash that was conserved to buy other properties at $.50/$1.00 at a 10% cap rate or better. And the investor will only pay 15% capital gains on most of that liquidity event, whether it is a sale or IPO, so they will be way ahead of the 6.75% original quoted yield. Investors who are patient will be well rewarded. This is not the first real estate bust and it won't be the last and you have to use the Warren Buffett investment philosophy: "Be fearful when others are greedy and greedy when others are fearful."

By the way, you can pay 7% on a 5% cap rate when you use leverage, especially at the dirt cheap rates that are available to qualified borrowers. A 5% cap rate at 50% leveraged property means a 10% cash flow rate, before tax incentives, depreciation and debt service. Throw in escalator clauses to the rent that start at five years, and you have a property that will pay off handsomely to long-term investors. Keep you eye on the horizon, not the bow, and you won't get sea-sick.
Dan

Wilsonville, OR

#13 Oct 20, 2009
Steve,
Thanks for the information.
In your experience with private common stock REITS what kind of profit returns have you seen investors make? Is it realistic to believe that an investor could average over 15-20% per year when the properties are sold, not including dividends?
Dan
Debbie

Winter Haven, FL

#14 Oct 21, 2009
I too would like to have an idea as to what an investor can expect at a liquidity event.
Debbie

Winter Haven, FL

#15 Oct 21, 2009
Any thoughts/opinions on the Healthcare Trust of America, Inc Healthcare Reit?
Mark Bratek

Jacksonville, FL

#16 Oct 23, 2009
I agree with Steve on most points and yes the returns can be in the 15-20% range. I beleive that a healthy portfolio consists of 30-40% alternative investments as a hedge against interest rate sensitive and stock market investments. I think that every clients needs differ based on their investment strategies. The properties in the new REITs are being purchased in this depressed realestate market. In theory the the realestate values should appriciate to give you the acceptable returns. As for Healthcare trust of America REIT. I have put many of my clients in this investment. This replaced the Grubb and Ellis fund recently. I beleive it is stating a target of 6.5% annual dividend. This is still a highly regarded secor and is great for diversification for REIT investors that want to invest in different types of realestate.
Concerned Shareholder

Huntsville, AL

#17 Oct 23, 2009
Mark Bratek wrote:
I agree with Steve on most points and yes the returns can be in the 15-20% range. I beleive that a healthy portfolio consists of 30-40% alternative investments as a hedge against interest rate sensitive and stock market investments. I think that every clients needs differ based on their investment strategies. The properties in the new REITs are being purchased in this depressed realestate market. In theory the the realestate values should appriciate to give you the acceptable returns. As for Healthcare trust of America REIT. I have put many of my clients in this investment. This replaced the Grubb and Ellis fund recently. I beleive it is stating a target of 6.5% annual dividend. This is still a highly regarded secor and is great for diversification for REIT investors that want to invest in different types of realestate.
Mark,

I would stay away from HTA - this is a start firm with lack of mgt experience. Scott Peters and his board stole this REIT from Grubb & Ellis. Scott's track record is not good - do a search on Golf Trust of America and see how those investor did. Grubb & Ellis has a new REIT out there - Grubb & Ellis Healthcare REIT II - this has all the same management team that made the first REIT successful - I would look into this investment. NO legacy issues to deal with and HTA FFO will never cover its dividend.
Debbie

Davenport, FL

#19 Nov 17, 2009
Mark Bratek

Jacksonville, FL

#20 Nov 19, 2009
I like the portflio HTA acquired from Grubb and Ellis it is a very good one.
Sherri

Des Allemands, LA

#21 Nov 20, 2009
I have a question for the very knowledgable advisors posting on this site: What is the commission YOU are paid on these wonderfuld REIT's and how does that commission compare to other products you offer? Are you disclosing this information to your client?
Last time I checked, the commission paid to advisors ranged from 6% to 8% of principal invested. This does not include the marketing dollars the REIT's are paying to the Broker/Dealers. My calculation tells me that if the REIT is paying a commission of 7% and a dividend to shareholder of 6.5%, it is costing them 13.5% to raise money. What is prime (the amount at which lenders will loan funds to purchase property)? It is currently 3.25%, 4 times prime???? There is a reason why the REIT cannot get financing from standard sources. Investor beware!
To the advisor from Tampa quoting Warren Buffet, be careful how that quote is taken. Most investors are being put in unsuitable REITS because advisors are using the "fear factor" investors have about the market and touting these as a stable investment because the share price remains the same. What good is a $10 share price on your account statement if clients can't get out of the investment and have to hold on to some obscure promise that the REIT will "one day become public.

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