Saturday, January 27, 2007

Does This Make Sense?
I went to Dividend Capital's meeting for due diligence analysts and other broker/dealer home office personnel. One take away was that the Dividend Capital's new REIT, Total Realty Trust, raised over $100 million last month. I was told that this high level of capital was from investors selling Dividend Capital Industrial Trust (DCT) (that had an IPO in December) and buying Total Realty Trust. (Total Realty Trust raised approximately $150 million in its first six months.) Investors are selling a publicly traded stock, that is fully invested and paying a solid dividend, to go into a non-traded REIT that is not fully invested and paying its dividend partially from reserves. This does not make sense. Brokers have to be recommending this switch - two commissions in less than five years. These are good brokers, the kind you'd refer to little old ladies.

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