Monday, July 22, 2013

Another Profile In Courage

I just re-read the InvestmentNews article I linked to earlier today.  It seems lame to me that the broker / dealer that terminated its Cole relationship last week waited so long.  This blog and other publications listed all the fees related to the Cole Holdings / Cole Credit Property Trust III transaction back in March.  Pulling selling agreements then would have sent a stronger, more effective message than waiting four months. 

I guess the supposed (passive-aggressive) punishment is to deny Cole reinvestment dollars when reps sell shares of Cole's two recent liquidity events.  But to me, this begs a bigger issue: BDs are scared of liquidity events because their reps are selling shares of the newly liquid, but established, fully invested REITs and reinvesting back into high commission blind pool REITs.  BDs don't want to tell their reps "no" and deny them a big payday.  I'd bet this thinking was not only behind the Cole termination, but also played a part in the other BDs' decision to suspend sales of American Realty Capital Trust V, despite the excuses given in InvestmentNews.


Anonymous said...

Bro- I'm assuming Cole knew it was coming. Aig told them they'd have 30 days of trading cole iii and then it would be game over. Nobody could've predicted the cole shares were going to trade down so quick. Regarding arc, check out what they bought. Burger kings bro! Rent paid by "joe franchise"! Not exactly credit quality tenants. Arc IV is approx 40% investment grade. Nick had no choice but to buy Arc iv with his own traded REIT before everyone figured out what he did. Aig is currently the only major natl bd selling arc v.

Anonymous said...

Wrong bro! ARCP buying IV gives it massive diversification. ARCP was over concentrated. The GE portfolio is solid and the only ones tat don't get that are the amateurs.