An exclusive, private real estate investment trust launched a decade ago has tanked.
American Spectrum Advisors, the adviser to the American Spectrum REIT I Inc., this month offered to buy 1.6 million shares of the moribund REIT for $1.25 per share. The shares were originally sold for $10 per share.
There are 450 shareholders of the private real estate investment trust, according to an offering letter sent this month. If those shareholders accept the offer, they would lose 87.5% of their original investment.
The $1.25 per share offer is a dollar less than the private REIT's estimated value at the end of 2012.
American Spectrum REIT I has a troubled history. It was formerly dubbed the Evergreen Realty REIT Inc. but changed its name in 2010 after a real estate investment management and leasing company in Houston, American Spectrum Realty, acquired the property management and asset management contracts held by Evergreen Realty Group and affiliates.
James Hurn, general counsel for American Spectrum Realty, did not return phone calls to comment.
Born in 2004 with a $25 million fundraising, the American Spectrum REIT I hasn't paid a dividend since 2009 and hasn't had an annual meeting of shareholders since 2010. The private REIT is small, with just $16.8 million in total assets, mostly comprised of a half-dozen storage properties.
Private REITs such as American Spectrum REIT I, which is no longer sold by independent broker-dealers, should not be confused with public, nontraded REITs. Private REITs are limited in their number of shareholders and offer investors and advisers far less disclosure than public nontraded REITs.
Private REITs, for example, do not submit filings to the Securities and Exchange Commission and are therefore much more opaque than a public, nontraded REIT.
William J. Carden, the president, chairman and chief executive of American Spectrum Realty, is the only current board member of the REIT. That company, publicly listed, has not filed its 2013 annual report with the SEC and stopped trading in April on the NYSE. According to SEC filings, American Spectrum Realty has created a plan to regain compliance with the Big Board's listing standards.