According to reports, the board of directors of Wells Timberland REIT Inc. recently announced a devaluation of shares from $10 per share to an estimated value of $6.56 per share.
The company blamed the 35% drop in value on the still-dismal housing industry but said that the REIT’s land holdings are continuing to grow in value.
According to the REIT’s 8-K filing with the Securities and Exchange Commission, the fund has timber assets of $11.70 per share, $0.28 of other net assets per share, and debt and preferred equity liabilities of $5.42. The board of directors used appraisal information from a forest consulting firm and a certified public accounting firm but made the estimate itself.
The $6.56 estimate for the common shares was based on information as of Sept. 30. However, investors in the fund might find it difficult to get that price in the market because of the illiquid nature of the investment.
This is not the first negative news involving Wells Timberland REIT. Last October, Wells Timberland REIT suspended redemptions of shares until the new estimate of share values was completed. Beginning in January, shareholders will theoretically be able to redeem shares for 95% of the estimated value — or $6.23. The REIT, however, funds redemptions out of its “distribution reinvestment plan,” and because it has made no cash distributions, it has also not made any ordinary share redemptions.
This news will obviously cause concern for investors in the REIT. The White Law Group continues to investigate FINRA arbitration claims involving non-traded REITs, like Wells Timberland REIT. Specifically, the firm is investigating the liability that the brokerage firms and financial professionals that recommended the products may have.
Financial advisors and broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives. Unfortunately for investors in non-traded REITs, brokerage firms often down play the risk of these products to their clients and sell the investments as safe, income producing investments.
If you invested in Wells Timberland REIT and are interested in your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.