tag:blogger.com,1999:blog-21846828.post3667561236943257901..comments2024-01-14T16:01:08.962-08:00Comments on The Rational Realist: The Double-Dip ExpressRational Realisthttp://www.blogger.com/profile/08886526093283532105noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-21846828.post-35380720280470341652013-03-16T14:53:02.485-07:002013-03-16T14:53:02.485-07:00My advisor colleague above seems woefully misinfor...My advisor colleague above seems woefully misinformed and must not have read the initial offering prospectus. Board of directors are voted on each year and their purpose is to be make decisions on behalf of the shareholders. Based upon the information available, they feel that this merger/listing is in the best interest of the shareholders of the fund. My clients are very pleased with the news considering the distribution will be going up, Cole will still manage the fund with more transparency, and they will soon have liquidity with an expected gain on the share price. If clients are upset, there will be a proxy in which shareholders can elect to allow the company to list or not.<br /><br />The author of this blog is normally a very well informed poster when it comes to these types of investments. He misses the mark here when he calls this an internalization of the past. Previous internalizations in the industry didnt include the sponsoring company being listed in those deals as well. From what I can gather, the revenue the Cole brings in will help to enhance the cashflow of Trust 3 and make the deal very accretive. I will continue to work with Cole considering the way they've handled themselves in Trust 2 and Trust 3. I've had plenty of bad experiences with other REITs, but Cole (along with very few others) seem to do things the right way. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-44224034716217892162013-03-16T08:41:26.493-07:002013-03-16T08:41:26.493-07:00If this was such a good deal, why doesn't Cole...If this was such a good deal, why doesn't Cole go out and get shareholder approval?<br /><br />It was the shareholders who raised the money for Chris Cole - not the board of directors. <br /><br />Anytime the investor opinion are left out, something is wrong with the transaction! <br /><br />I'm an advisor who sold CCPT3 and will NEVER sell this firms products again and I will voice this to my BDs. Cole has put me in a bad position with my client.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-39054045059763735422013-03-15T22:22:35.643-07:002013-03-15T22:22:35.643-07:00You do understand that this is the internalization...You do understand that this is the internalization of the entire business? I'm not necessarily defending the dollar amounts, but it's definitely not apples-to-apples, when other REITs have internalized 'some' staff and $7mm worth of furniture, while the sponsor still existed in it's full form to continue operations. In any case, what's the profit on selling $7mm worth of furniture and buying it back for $1.00? Not a bad deal for not having to lift your cheeks off the chair...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-63542012268069082812013-03-15T14:29:47.847-07:002013-03-15T14:29:47.847-07:00So if a firm raises $10M for a REIT, the BD keeps ...So if a firm raises $10M for a REIT, the BD keeps $100k and then another 70-100k of the rep's commission. They have to have a dept to oversee alternatives if they are doing it right. There are expenses associated with that. If any product blows up they are on the hook in settlements for way more than they made on the commissions.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-69907218881882376372013-03-15T13:33:47.337-07:002013-03-15T13:33:47.337-07:00Of course BDs get paid. They make a ton more than ...Of course BDs get paid. They make a ton more than MF and ETF providers pay out. All BDs take an override on the advisor's business as well as the haircut they take from the rep payout. Thats why reps and BDs love, love, love American Realty going to liquidation so quickly with their own funds. Everyone makes a ton of money upfront except the shareholder who shoulders the load each time the money goes into the REIT.<br /><br />With Cole, I'm actually not too upset about the payout to Chris Cole and management. Its not a true internalization like the NT REIT space has seen in the past (i.e. Wells REIT 1 and Inland) where these sponsors paid themselves to separate the sponsor from the actual listed REIT. Cole Holdings will be wrapped up into their Trust 3 (think Franklin Templeton and BlackRock as examples in the MF and ETF space) and have to report their financials going forward, including fees made from the distribution of future REITs. That adds a degree of transparency the NT REIT space has rarely seen.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-23182909895495745462013-03-15T13:32:14.317-07:002013-03-15T13:32:14.317-07:001% to BD's is just the taste they get from the...1% to BD's is just the taste they get from the sponsor. Think of all the REIT dollars invested (approx $10 billion annually). The advisor makes 7% on those dollars ($700 million). The BD typically takes 10%-15% of those commissions. Don't kid yourself, BD's love 'em some REITs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-755632259613636022013-03-15T12:57:39.999-07:002013-03-15T12:57:39.999-07:00BD's get paid? The 1% doesn't quite cut it...BD's get paid? The 1% doesn't quite cut it when you think about the risk involved allowing alternative investments on their platform.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-21846828.post-75561981813039652952013-03-15T09:53:39.541-07:002013-03-15T09:53:39.541-07:00Thanks. I am getting the sense you may be right. ...Thanks. I am getting the sense you may be right. But this is true only if the stock trades high enough for investors to sell at a price high enough to get their principal back. If the listed stock trades below $10, everyone will care.Rational Realisthttps://www.blogger.com/profile/08886526093283532105noreply@blogger.comtag:blogger.com,1999:blog-21846828.post-65163506910403579222013-03-15T06:52:01.105-07:002013-03-15T06:52:01.105-07:00Nice post, bro. Unfortunately, nobody cares. Advis...Nice post, bro. Unfortunately, nobody cares. Advisors still get paid. BD's still get paid (a TON). Clients still make out pretty well. Anonymousnoreply@blogger.com