Resource Realty has withdrawn its "innovative" office REIT. The board of Resource Income Opportunity REIT voted to terminate the REIT's offering. After a three-year offer period that included changing the REIT's structure to a perpetual life REIT, the board realized the REIT's investment premise stunk and that no broker wanted to sell it and no investor wanted to own it. That the REIT only raised $2.1 million from investors over its extended offer period is a good indication of the market's low opinion of the REIT. What a wasted effort.
C-III Capital Partners acquired Resource Realty's parent company, Resource America, in September 2016. The expertise of C-III provided no sales boost to Income Opportunity, or to Resource's other investment funds. After almost two years of C-III's tenure, Resource has had no new offerings, and its existing funds' capital inflows have been weak. Through March, and after a two-year offer period, Resource's flagship apartment REIT, Resource Apartment REIT III, had only raised $45 million, which would include any sponsor contribution. That is bad and looks like a "failure to launch" situation. Resource's closed end funds' inflows are better, but not by much, and one, its interval fund, has seen redemptions since inception of 16.4% of capital received. The credit fund has raised $100 million net of redemptions in three years (bad), and the interval fund has raised $242 million net of redemtions in five years. The interval fund, which was one of the first offered to broker dealers, is a distant third in terms of capital inflow behind the Griffin and Bluerock interval funds.
C-III needs to rethink its $200 million acquisition of Resource America. C-III either needs to create attractive products or shut down Resource's lame offerings all together, not that anyone would notice.