Sunday, April 14, 2013

Mind The Time Gap

Cole Credit Property Trust III (CCPT III) made a filing Friday announcing that its board of directors voted to suspend its dividend reinvestment plan and share redemption plan.  CCPT III will pay all its dividends in cash going forward, a typical decision for a non-traded REIT as it prepares for a listing.  Elimination of share redemption plans is typical, too, for non-traded REITs preparing for a listing, but timing of the elimination varies.  Cole Credit Property Trust II (CCPT II) suspended its share redemption plan in December 2012, more than a month before its announced merger with Spirit Realty, and more than six months before the merger is expected to close.  Another non-traded REIT, American Realty Capital Trust (ARCT), suspended its share repurchase plan on February 15, 2012, just two weeks prior to its March 1, 2012, listing.

If CCPT III's June listing goes as planned, investors should be without liquidity for less than three months.  (CCPT III, according to its 2012 10-K, redeemed all $28 million of shares requested in 2013's first quarter.)  But there is a twist to the CCPT III suspension that wasn't not present in either CCPT II or ARCT.  While investors, have to wait until CCPT III's June listing for anymore liquidity, Cole Holdings didn't have to wait for part of its payment, as CCPT III paid Cole Holdings the $20 million cash portion of its purchase price earlier last week. 

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