Largest nontraded REIT in SEC probe

Inland American says commission is looking into trust's fees, administration

May 10, 2012 @ 11:09 am

By Bruce Kelly

The largest nontraded real estate investment trust in the industry, Inland American Real Estate Trust Inc., is under investigation by the Securities and Exchange Commission for potential violations of federal securities laws regarding its fees and administration.

Inland American, which has $11.2 billion in real estate assets, made the SEC investigation known Monday in its quarterly report. The SEC's investigation centers on common criticisms around the nontraded-REIT industry, namely the details of its fees.

RELATED ITEM Largest nontraded REITs

Inland American “has learned that the SEC is conducting a nonpublic, formal fact-finding investigation to determine whether there have been violations of certain provisions of the federal securities laws,” the company said Monday in its quarterly report. Those potential violations are “regarding the business manager fees, property management fees, transactions with affiliates, timing and amount of distributions paid to investors, determination of property impairments, and any decision regarding whether the company might become a self-administered REIT.”

“Inland American has not been accused of any wrongdoing and we are fully cooperating with the SEC," said Nicole Spreck, a company spokeswoman. “Inland American does not believe it has done anything wrong and we continue to execute against our business plan and strategy. Beyond that we really can't comment on the investigation itself because it is a confidential process at the request of the SEC and we plan to honor that request. “

The nontraded-REIT industry recently has seen a number of REITs cut their estimated values and has drawn increased scrutiny from securities regulators over the issue.

Inland American is one of five REITs that have been sponsored by The Inland American Real Estate Group of Companies Inc., according to that company's website. At the end of last year, Inland American directly or indirectly owned 964 properties, representing 49 million square feet of retail industrial and office space. The REIT also owned 9,500 apartment units and 15,600 hotel rooms.

A related REIT, Retail Properties of America Inc., has also seen difficulties recently. Formerly known as Inland Western Retail Real Estate Trust Inc., Retail Properties of America had an initial public offering last month in which its shares were listed at an equivalent of $3.20 per share. Last June, that REIT's management said its estimated value was $6.95 per share.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Why a #MeToo story about the financial advice industry was important to do

Reporter Greg Iacurci and editorial director Fred Gabriel discuss the survey behind our cover story on sexual harassment in the workplace.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

10 millennials making their mark in Washington — and beyond

These next-generation leaders are raising their voices and gaining influence over financial advice regulation and legislation.

Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Former Merrill Lynch star broker Thomas Buck sentenced to 40 months in prison

He pleaded guilty to securities fraud in 2017; charged clients excessive commissions.

Rules for claiming Social Security at 70

Some individuals' benefits will begin automatically; others have to take action.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print