Nontraded REIT will list on NYSE

Chambers Street Properties is latest to seek liquidity event

Apr 30, 2013 @ 3:36 pm

By Bruce Kelly

Another nontraded, triple-net-lease REIT intends to list on a stock exchange, making 2013 another impressive year for such real estate investment trusts.

Chambers Street Properties, with $3.2 billion in assets, intends to list on the New York Stock Exchange on or about May 21. The REIT, which launched in 2006 and was formerly the CB Richard Ellis Realty Trust, has equity of a little under $2.5 billion.

Chambers Street's announcement of a listing comes after two other triple net lease REITs, Cole Credit Property Trust II and Cole Credit Property Trust III, said earlier this year they were also working on “liquidity events.” In the nontraded REIT industry, that phrase means giving investors the ability to cash out their formerly illiquid shares through a merger, acquisition or listing.

Triple-net-lease REITs, in which high-quality tenants and not the REIT sponsors are responsible for maintenance, insurance and tax costs for the properties, have been a favorite of investors and financial advisers seeking income in a near zero interest rate environment.

“The markets are very strong right now and receiving these types of offerings pretty favorably,” said Jack Cuneo, chief executive of Chambers Street Properties. He said that 80% of the REIT's assets were in triple net least properties, with the goal to continue buying corporate net lease assets. “We're pretty excited about the market and our position in it and where we're going,” he said.

The REIT also intends to launch a modified “Dutch auction” tender offer to buy up to $125 million of its shares, within a range of $10.10 to $10.60 per share. At the end of last year, the REIT was given an estimated value of $10 per share. Last year, the REIT internalized its management team without paying a separate internalization fee, the company said in a statement.

The move by Chambers Street Properties comes on the heels of announcements in January by Cole II and in March by Cole III that they were also moving toward liquidity events. Cole II expects to complete a merger with the listed REIT Spirit Realty Capital by the end of September. Those two REITs would have a combined $7.1 billion in real estate assets.

Meanwhile, Cole III, with $7.4 billion in assets, intends in June to list on the NYSE.

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