REITs offer inexpensive way to invest in real estate

early two-thirds of Americans are homeowners, and for many people their dwellings are the biggest investments they own. But does this make the vast majority of homeowners real estate investors in a broad sense? Not really.

Homes clearly are investments, but they're also places to live. They require ongoing expenses for maintenance, repairs and property taxes. They aren't very liquid and can't be accurately valued, in real time, without a sale or appraisal. All this differentiates homes from stocks, bonds, mutual funds and other standard investments.

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Spirit, Cole REITS complete $7.4 billion merger

Spirit Realty Capital and Cole Credit Property Trust II have completed their $7.4 billion merger.

The combination of the Phoenix firms will create one of the largest publicly traded real-estate investment trusts operating in the net-lease sector.

Net-lease REITs own free-standing buildings occupied by single tenants, including retailers, restaurants and office tenants.

Together, Spirit Realty and Cole Credit will own 1,900 properties in 48 states, making it one of the largest net-lease REITs in the country. The two companies’ merger was approved at a shareholder meeting on June 12.

The combined entity will go by Spirit Realty Capital and will list its common shares on the New York Stock Exchange under the existing ticker symbol “SRC” beginning today.

Read more...Spirit, Cole REITS complete $7.4 billion merger

2 Valley REITs refocus from buying to selling

Two of metro Phoenix’s biggest housing investors are more concerned with selling than buying right now.

Scottsdale-based American Residential Properties raised $287.7 million in an initial public offering last month. The real-estate investment trust sold 13.7 million shares of stock at $21 each.

Scottsdale-based Colony American Homes had planned to raise $260 million through an IPO on Wednesday but postponed it because of falling REIT prices. REIT share prices have fallen more than 10 percent since mid-May.

There is no word yet on when the division of Santa Monica, Calif.-based Colony Capital plans to reschedule its public offering. Colony had expected to sell 20 million shares Wednesday.

Read more: 2 Valley REITs refocus from buying to selling

Spirit Realty Doubles Size, Diversifies with Cole Credit Merger

Spirit Realty Capital Inc. (NYSE: SRC) and Cole Credit Property Trust II (CCPT II) announced a merger on Jan. 22 that would create what is expected to be the second-largest publicly traded triple-net lease REIT in the United States.

The Spirit Realty name and management team will be retained for the combined company. Additionally, Spirit will grow its board from seven to nine members with the addition of two directors from CCPT II. The transaction is intended to help accelerate Spirit Realty’s growth strategy while diversifying the company’s portfolio. Upon completion of the deal, Scottsdale-based Spirit Realty will own or have an interest in 2,012 properties in 48 states and have an estimated value of approximately $7.1 billion.

Read more: Spirit Realty Doubles Size, Diversifies with Cole Credit Merger

Gaylord resort appears in limbo for Mesa

The company that was planning an $800 million resort and conference center in southeast Mesa appears to be getting out of the resort -development business.

Nashville-based Gaylord Entertainment Inc. said Thursday that it has agreed to sell the Gaylord Hotels brand, along with rights to manage its four existing hotels, to Bethesda, Md.-based Marriott International Inc. for $210 million.

Upon completion of the sale, Gaylord officials said, they will revamp the company's business model to cease being a developer of multimillion-dollar resorts and become a real-estate investment trust, or REIT.

A REIT pools investor money to buy or develop revenue-generating properties, with proceeds distributed to investors as dividends.

Gaylord officials did not say whether the restructuring, to be completed by Jan. 1 if shareholders approve, would put an end to the already-postponed Mesa resort plans for land owned by Scottsdale-based DMB Associates.

Still, a company news release issued Thursday did say the transition to a REIT would halt existing plans to develop a resort of similar size and cost in Colorado.

"The company will no longer view large-scale development as a means for growth and will not proceed with the Colorado project in the form previously anticipated," the release said. "The company will re-examine how the project could be completed with minimal financial commitment by Gaylord during the development phase."

DMB Associates spokeswoman Cassidy Campana said it's too early to tell how Gaylord's proposed restructuring might affect the Mesa plans.

"It appears that shareholders will still have to approve this proposed deal later this summer," Campana said. "It sounds like this will be a wait-and-see."

Last July, Gaylord executives reassured DMB and city officials including Mesa Mayor Scott Smith that the company still intended to build the resort despite postponing the project until economic conditions improved.

Smith and the other local officials had traveled to Gaylord's Nashville headquarters that month to address a growing concern that the resort never would be built.

by J. Craig Anderson - May. 31, 2012 06:20 PM The Republic | azcentral.com



Gaylord resort appears in limbo for Mesa

2 REIT veterans begin new venture

The third time should be a charm for Valley financiers Christopher Volk and Morton Fleischer. The first two certainly were.

Volk and Fleischer, who previously grew and sold two real-estate investment trusts in multimillion-dollar deals, have started a new firm, STORE Capital, with a similar model of extending financing to single-tenant properties such as chain restaurants, drugstores, supermarkets and other retail businesses.

Volk and Fleischer announced Wednesday that they have raised $500 million in private equity, with proceeds used to fund the Scottsdale company's initial real-estate investments.

That includes a $400 million commitment from OCM STR Holdings, a subsidiary of Oaktree Capital Management, a Los Angeles firm managing $85 billion in assets.

STORE, which stands for Single Tenant Operational Real Estate, was organized as a REIT. Volk and Fleischer previously led Franchise Finance Corporation of America until its sale for $2.1 billion in 2001, and Spirit Finance, which sold for $3.5 billion in 2007.

REITs don't pay income taxes and thus have a relatively low cost of capital.

"The strategy is similar to what we used to do at Spirit," said Volk, the entity's chief executive officer, adding that he believes now is a good time to form a firm like STORE.

"Banks are less active, especially in lending to the middle-market area," he said. "While the economy is fragile, companies that are surviving have good prospects for the future."

Fleischer is chairman of the new company.

Other members of the senior management team, several of whom have worked together since the early 1980s, include Catherine Long, executive vice president and chief financial officer; Michael Zieg, executive vice president of portfolio management; Michael Bennett, executive vice president of operations; and Mary Fedewa, executive vice president of acquisitions.

The Volk-Fleischer team has invested nearly $10 billion in more than 7,000 properties over the past three decades, raised about $3 billion in capital and paid more than $5 billion to investors.

Volk said he expects STORE to begin financing properties by early 2012 and anticipates the firm to have about 40 employees. It is looking for people in accounting, finance, sales and credit analysis.

Potential job or financing applicants should visit store capital.com.

by Russ Wiles The Arizona Republic May. 25, 2011 07:15 PM




2 REIT veterans begin new venture

Fool.com: This Housing Market Is On Fire!

Investors and analysts have tried to call the bottom in the housing market for years. Instead of trying to guess when home prices might stop falling, some investors have turned elsewhere to look for gains -- and they're finding them in the red-hot market for residential rental properties.

Going with the flow

Just five years ago, the key to success in real estate investing was simple: Buy just about any residential property, wait anywhere from a month to a year, and then sell it at a huge profit. After all, since the turn of the millennium, similar investors had made boatloads of money flipping houses, and investors were seduced by the idea that even during past real estate busts, overall housing prices hadn't actually fallen in price substantially.

Of course, we all know the aftermath of the housing bust, as that long-held real estate wisdom fell prey to harsh reality. Millions of homeowners have lost their homes, and millions more are underwater on their mortgages. Shareholders of companies related at all to housing, from homebuilders and banks to Fannie Mae and Freddie Mac, have suffered greatly. It's tempting to think that after such a huge drop in prices, the housing market must offer great values.

But rather than trying to decide whether single-family homes are a great value or merely a value trap, look instead at these figures: Apartment rents have risen 6% since 2006 and are expected to rise another 3% this year. Vacancy rates for apartments have fallen from 8% just a year ago to 6.2% today. Millions of displaced former homeowners have no choice but to rent.

At the same time, low interest rates have made it easier for prospective real estate investors to buy rental properties and have reduced carrying costs. Combined with higher rents, that adds to the profit potential of rental properties.

How to cash in

Plenty of real estate investors make a small business of their rental properties. But you shouldn't look at rentals as free money. Investors earn a lot of their profits through hard work, going through the often difficult process of finding creditworthy tenants, dealing with repair requests and other problems that demand immediate attention, and juggling the ongoing maintenance needs that any property owner has to handle. And while you can pay a property management company to take care of some of those jobs, doing so adds to your overhead, reducing your potential returns.

If you don't want to deal with individual properties, you can find easier ways to invest. The obvious first place to look is at real estate investment trusts that focus on apartments and other rental real estate. Let's look at a few of the biggest options in this space: Some REITs have national scope. Equity Residential (NYSE: EQR ) , for instance, has properties in 24 states. Apartment Investment & Management (NYSE: AIV ) and UDR (NYSE: UDR ) have a similarly wide area of operation. Other REITs have a more geographically focused approach. BRE Properties (NYSE: BRE ) rents almost 24,000 units on the West Coast and in Arizona and Colorado. Home Properties (NYSE: HME ) operates 125 communities on the East Coast. Some rental REITs have a more specialized focus. You can find plenty of REITs that include senior housing, such as health-care REIT Ventas (NYSE: VTR ) . On the other hand, American Campus Communities (NYSE: ACC ) targets the other end of the age spectrum, building and operating student housing facilities as well as providing management services for colleges and universities that own their own dormitories.

When you look at the returns of these stocks over the past two years, you won't see the losses that homebuilders have sported. Rather, their shares are reflecting the favorable fundamentals of the rental industry. Yet as REITs, these companies provide significant dividends to investors -- returns that any real estate investor can appreciate.

Wave of the future?

Some have argued that the American dream of homeownership is dead. Rather than mourning that fact, though, you might do better for yourself by investing in the countertrend of rental housing. With conditions favoring renting, it's possible that you'll find more gains either in rental REITs or from rental properties you find on your own.

REITs are just one way that investors can profit from dividends. Find out the Fool's recommendations on 13 high-yielding stocks for your portfolio; instant access to the names of these stocks is free if you click here.

Fool.com: This Housing Market Is On Fire!

The REIT Rebound? - CNBC.com

The REIT Rebound? - CNBC.com