Wednesday, October 19, 2016

Confluene of Crap

This blog has tracked UDF IV's lack of financial statements, which culminated in yesterday's de-listing announcement for UDF IV due to its inability to file financial statements.  Well, UDF IV is not the only non-traded REIT with a failure to file financial statements problem.  A small public REIT, First Capital Real Estate Trust, which was formerly United Realty Trust, has not filed financial statements since the 2015 second quarter 10-Q.  In September 2015, United Realty's former sponsor, advisor, property manager, and principal entered into a sales agreement with First Capital Real Estate Investments, LLC, in a deal that provided cash and a consulting contract to United Realty's former principal.  The REIT changed its advisor and changed its name to First Capital Real Estate Trust.

In October of 2015, First Capital Real Estate Trust fired its auditor, Ernst & Young, and has not filed an 8-K disclosing a replacement auditor.  The REIT has not filed any financial statements since the transaction with First Capital, and it has been through three CFOs since August 2015, with the last leaving in early April of this year.

There is much more related to First Capital Real Estate Trust.  Take thirty minutes to read through First Capital's public flings for the past year to get your Halloween fright.  You'll need to reference United Realty's 2014 10-K to partially grasp, or at least put in some jaw-dropping context, what the heck First Capital did in September with its Brooklyn, New York, Tilden Avenue property. 

Here is another Halloween scare:  I read a "due diligence" report, dated late August 2016, on First Capital Real Estate Investment's new private debt offering that failed to mention any of the issues at the REIT.  Maybe it is just me, but I'd think any broker dealer reading a "due diligence" report would find it material that an affiliated flagship REIT had no auditor, had no CFO while churning through three CFOs in less than a year, and had not filed any financial statements since 2Q 2015.  Thanks for the heads-up, Bozo. 

1 comment:

Anonymous said...

You mean firms who do "Due Diligence" aren't merely copy and pasting from the prospectus and being coached. Nobody puts on extravagant conferences anymore where they charge sponsors 10k, 20k, 30k up to 100k to fly out the dinosaur advisors that still sell 7% products and gather together to not have anything show up a statement with a loss that pays them anything?. Now the big boys will come to clean up the mess and everyone will figure out a way to still pay the "whorey" large BD's and the smaller BD's will sign firms like this because they pay the brokers max, pay the BD max and pay for the conferences where they get 10 min commercials in front of the hungover crowd of advisors. Why are the DDO's of some of there firms still employed is my question?