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Tale of two troubled REITs

Inland's biggest REITs journey from crisis back to relevancy

Mar 5, 2014 @ 12:01 am

By Matt Sirinides

Inland Real Estate Investment Corp. is no longer the force in the industry it once was, resulting in the rise and fall of two of its biggest REITs: Inland American Real Estate Trust and Retail Properties of America (RPAI), formerly Inland Western Retail Real Estate Trust.

InvestmentNews senior columnist Bruce Kelly recently documented Inland's plans for a comeback. We've followed up by collecting the key milestones in the lifespan of those two REITs in a timeline, from launch to recovery.

Launched during the heart of the run-up in real estate in 2003 and 2005, the two REITs ranked #1 (Inland American) and #2 (Inland Western) in equity raised by nontraded REITs, selling at the time for $10 per share.

But as the credit crisis sunk in, commercial property values sagged and refinancing underwater retail and multifamily portfolios became prohibitive. Inland shareholders were confronted with losses. The first shock came in 2009, when Inland was forced to cut dividends by 70%.

Share value continued to tumble, and Inland Western later conducted a poorly received IPO. Inland's recovery has not been as dramatic as with other big commercial real estate players that were better positioned to ride out the credit crisis, but despite a lingering bad taste with investors, Inland's CEO is confident the firm is poised for a turnaround.

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