Thursday, January 13, 2011

Something to Think About
The last post noted that the former CNL hospitality portfolio traded at a 52% discount from its early 2007 sale price.  (I have no information about whether any of the properites have been sold since early 2007.)  For those of us that have short-term memory problems, early 2007 was the height of the real estate frenzy with trades happening at historical prices.  Here is my early 2007 post noting the transaction. 

Investors in the CNL hospitality REIT received a return of their original investment, plus about 2.5% premium.  This minuscule premium occurred at the peak of one of the great real estate bull markets.  This begs a larger question. If a large non-traded REIT only generated such small capital appreciation at top of a real estate cycle, what does it say about the chances of other non-traded REITs being offered and exisitng today of selling their portfolios at a premium?  It is unlikely that they'll get the benefit afforded to CNL hospitality by selling at the height of a pricing cycle. 

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