Commercial Real Estate Direct Staff Report
Inland American Real Estate Trust has reset the value of its common shares to $8.03.
That is down from the $10 that the shares have sold for since the Oak Brook,, Ill., non-traded REIT was launched in 2005.
It reset the value in compliance with a policy that requires REITs, whose shares are not publicly traded on exchanges, to establish per-share prices that more accurately reflect the value of their assets.
Those REITs, whose shares generally are marketed for around $10 apiece, must reset share values 18 months after closing their initial rounds of equity-raising, according to the policy set by the Financial Industry Regulatory Authority. Inland ended its initial capital-raising effort in April 2009.
In a regulatory filing, the REIT called the reset value "a snapshot in time" that does not necessarily reflect the long-term value of its shares.
"We believe the current downturn in the economy has depressed the value of our assets and hence the estimated value of our shares," it said. "The value of our shares will likely change over time and will be influenced by changes to the value of our individual assets as well as changes and developments in the real estate and capital markets."
Among the other REITs that have reset values are Behringer Harvard REIT I, which reset its shares to $4.25 in May, and KBS REIT, which reset its value to $7.17 late last year. Their shares also had traded at $10 each.
Inland American plans to re-evaluate its portfolio and reset its per-share value annually, beginning Dec. 31, 2011.
The REIT, managed by Inland Real Estate Investment Corp., owns 980 properties. Its portfolio includes 21.6 million square feet of retail space, 10 million sf of offices, 15.9 million sf of industrial space, 10,154 multifamily units and 15,146 hotel rooms.
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