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Discussion Starter #2
FYI call is 20 minutes long is a conference call, and includes a lot of positivity. Apparently now that distributions have been suspended the REIT is in better shape financially.
 

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Capital appreciation?

This seems very disturbing. These private REITs advertise heavily on the basis of their yield, and yet they have cut their distributions. Centurion cut their distribution yield to 7.35% from 8%.
 

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Discussion Starter #5
I'm not quite as disturbed by a REIT lowering distributions by .65% as I am by a REIT that pays out 14% suspending distributions altogether. Don't forget buildings are selling at 5% cap rates.

A while back Emmanuel Arruda called me to speak to me about my blog post, in the comments people posted links he didn't like. I got to ask him why the Blue Book reads so positively and quite frankly it seems to be written for 5th graders. Private Reits can only be marketed to "sophisticated investors" so why is their prospectus written to be engaging for the vulnerable it too good to be true speak.

Weird thing is now that I've had trademark problems I spot weird trademark stuff. I mean why would you trademark the phrase intergenerational wealth? That's a red flag for me.
 

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Well we haven't had a crazy real estate related "I just joined the forum, should I invest in this negative return property" post in a while. :p
 

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The blog post was http://landlordrescue.ca/reit-real-estate-investment-trusts/ and if you go all the way to the bottom you'll see that the update came from the comments.

As for return of capital for investors it appears that League REIT has different classes of investors. Or something. You know CC bullshit confuses me and I can't really figure it out. "Manny" first shuts down all questions investors have on the conference call. Kind of jollies people up apparently people who rely on his REIT for income are "gonna be taken care of." There were different classes of units, ones that participated in property appreciation and ones that just paid interest. I think "Manny" will continue to get paid.

They also seem to have a web of different companies and REITs. Personally I think one company is usually enough for anybody. When I see rats nest of corporations owned by the same people it makes me think they are hiding stuff. The IGW REIT was lending money to another company.

I got a call from Emmanuel about 3-4 months ago ??? and quite frankly I was confused about why he was calling me but when I googled League today I'm the second search result. Interesting they are still looking for new investors but offering 8% now at least as per top rated google paid search results. I told him that he could post his own comment which he did. He was particularly taken with me commenting that it all sounds like a ponzi scheme. I told him that if I was factually incorrect he could send me financials and i would look at them and strike out and correct my statement. Lets face it I'm not right all the time.(although it sure is satisfying/horrifying to be right.) I don't remember getting anything. The firing of the appraiser was a real red flag with me. It just seems so weird that they would hire this top rated appraiser, crow to all their investor/followers that they had and fire them at same time their report was going to be issued. Now Manny did say that they were just moves to another project of theirs, but I don't believe it.

I'm not sure what will happen to them or if they can recover. Hopefull we can get some input on the situation from some people who may have invested with them.

I have to say I really disliked their Blue Book, REALLY, REALLY, because it seems to target the person who wasn't too bright or financially astute. Like widows for instance or even orphans :peach:
 

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This should be a lesson to all the folks in other threads who argue the "private" REITs are above the noise of the market . . . there're NOT . . . especially with some of these guys (IMO, and just look to the US for back up)! Maybe they are above the noise of the market (and I've never been able to see any actual financials), but obviously their banks have ! Good luck with liquidity.

Charter REIT became Partners REIT under the same management team . . . nobody wanted Charter's assets (even at a premium to market) . . . buyers of last resort ??? I believe Cornwall Square is already back on the market. Wonder how that will turn out . . . no 5 cap there!
 

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Discussion Starter #12
This should be a lesson to all people who think that any REITS are above the market. They are not.

In fact I would expect that public REITs are in for a much bigger rout.

Lets just say this about REITs. They put 30% down and get 5% return on that money. Then they get the spread of 2% on the mortgage because the building pays out 5% and the mortgage say cost them 3%.

How can any REIT pay out more than market dividend to investors? By refinancing their buildings they bought when interest rates were higher or by increasing income in the buildings. Those are the two options.

When interest rates go up, building values go down. They are inversely correlated. That's when REIT's will start to fall like dominos. That's when banks will start to call in their loans.

If you are retired I know that REIT's are very attractive for the income they produce. It's ok to keep a percentage of your portfolio in REIT's. But please look at your diversification for your own protection.
 

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Can't disagree, and with the run-up in some of the big names, they now yield the same as some of the banks (who hold those mortgages). REITs are really just a financial vehicle, and should only contain long term stable properties (ie. HR.UN without the noise of The Bow).

So the caution is for those who are turning to lesser quality names for the "higher" yield (believe I saw something about REITs with market caps under $500M having the largest gains). Look for quality names, and with the current run on price, a good entry point.

And to the point above, look for a management team that matches lease term to loan amortization.
 

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I listened to that conference call, very interest, but very disturbing on numerous fronts :

- A 14% dividend yield is a definite red flag. How was this accompished ? Well, either they leveraged up above 85%, or they were paying distributions from funds coming in from new unitholders, or combination of both.
- They spent 10 minutes to explain the complexities of GAAP to IFRS transition and how they were unprepared. How could they be unprepared, this was known for 3+ year in the industry. In addition, they were not able to mention 1 specific IFRS rule that would do harm to their balance sheet (the obvious one is stating everything at fair market value)
- Dividend yield is not based on NAV value, so i don't understand why they are suspending the dividend. A dividend yield is mostly a function of cash-on-cash yield, which is based on a property's NOI vs. the equity contributed initially. The only possible explanation is that with the new financing they obtained ($40M) to refinance their existing loans, they were squeezed by the lender to suspend distributions until further notice because their LTV is in the 90's.
- They have an enormously complex unitholder structure.
- Why don't they do an IPO ? Because they know that analysts will destroy their balance sheet. They even mention the possibility of a reverse merger, which is what chinese companies did and got the attention of Muddy Waters. It allows them to be public but without all the scrutiny of a well written prospectus.
 

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^ yup, + 1, and I bet you only hit the tip of the iceberg ! Sounds like no new "widows and orphans" are being pushed into this thing, and banks are slowing down on "blend and pretend". Wonder what they still own that I would want to buy!
 

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Discussion Starter #17
I want to point out that they are still advertising on the internet for new investors.

This is their google ad.

8% Income Canadian REIT | leagueinvestmentservices.ca
www.leagueinvestmentservices.ca/
Accredited Investors- Monthly Cash Flow - RSP Eligible. Free Blue Book

The link leads to http://leagueinvestmentservices.ca/...mid%3Dgaw%26cid%3Dsearch&rct=j&q=private+reit

It also appears that they are accredited by the Better Business Bureau. :rolleyes2: (look all the way down to the lower right hand corner of the website) of course that appears to be a different and obviously better company.
 

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Centurian REIT did not cut distributions.

Capital appreciation?

This seems very disturbing. These private REITs advertise heavily on the basis of their yield, and yet they have cut their distributions. Centurion cut their distribution yield to 7.35% from 8%.
They did not cut their distribution! If you had a brain you would see the initial distribution was 8% based on an NAV of $10. Units are now valued at $11.15 (ie: capital appreciation), thus the yield is lower.
 

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They did not cut their distribution! If you had a brain you would see the initial distribution was 8% based on an NAV of $10. Units are now valued at $11.15 (ie: capital appreciation), thus the yield is lower.
Wow . . . little harsh, especially as the private REITs are known for little or no disclosure . . .
 
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