| In Millions | Cole Credit Properties | Cole Credit Properties II | Cole Credit Properties III |
| Total Assets | $179,307 | $3,485,335 | $3,243,658 |
| Total Liabilities | $123,421 | $1,912,723 | $1,180,608 |
| Equity Raised | $100,331 | $2,200,000 | $2,500,000 |
| Net Real Estate | $172,410 | $3,154,692 | $2,987,707 |
| Direct Debt | $120,485 | $1,673,243 | $1,061,207 |
| Leverage Ratio | 70% | 53% | 36% |
| Revenue | $16,124 | $269,150 | $143,556 |
| Net Income | ($2,626) | $30,430 | ($6,603) |
| FFO | $2,851 | $117,939 | $33,968 |
| Mod Cash Flow[1] | $5,686 | $123,533 | $92,247 |
| Dividends | $5,408 | $129,497 | $121,748 |
| Yield ($10 share) | 5.5% | 6.2% | 7.0% |
Cole Credit Property Trust (CCPT) closed its offering in September 2005. At December 31, 2010, the REIT had $179 million of assets including $172 million of real estate owned directly. CCPT realized $16.1 million total revenue and a $2.6 million net loss. The shareholder 5.5% dividend is fully covered by Funds from Operations and Modified Cash Flow. The company recorded a $2.835 million impairment to a property whose tenant filed for bankruptcy protection during 2010. Property operations in 2010 capitalized at a 8.0% rate suggest net real estate value of $184 million, approximately 7% higher than the book value of the real estate. his estimate would suggest a share value of approximately $6.75, about 12% lower than management's estimate of $7.65 per share.
Cole Credit Property Trust II (CCPT2) closed its offering in January 2009. At December 31, 2010, CCPT2 had $3.5 billion total assets and $1.9 billion of liabilities. Net real estate owned was $3.2 billion. The REIT earned net income of $30.4 million on $269 million of revenues. CCPT2 paid a 6.2% dividend, amounting to $129.5 million which was 91% covered by FFO and 95% covered by Modified Cash Flow. On June 22, 2010, CCPT2 published an estimated value of $8.05 per share, which valuation remains in effect. On June 28, 2011, the REIT filed a Form 8-K with the SEC that included the disclosure:
"On June 28, 2011, Cole Real Estate Investments announced that it is actively exploring options to successfully exit CCPT II’s portfolio within the next 12 months, and that the potential exit strategies it is looking at include, but are not limited to, a sale of the portfolio or a listing of the portfolio on a public stock exchange."
Cole Credit Property Trust III (CCPT3) commenced its initial equity offering in October 2008, and opened a follow on offering in September 2010. As of December 31, 2010, CCPT3 had $3.2 billion of assets, including $3.0 billion of net real estate, and $1.2 billion of liabilities. The company reported a net loss of $6.2 million on $143.6 million of total revenues. The REIT generated $34 million of Funds From Operations and $92.2 million of Modified Cash Flow, which were 28% and 76% of dividends paid.
[1] AdvisorClarity measure equals (1) net income plus (2) depreciation and amortization, plus (3) acquisition fees and expenses, less (plus) (4) any realized or provisions for capital gains (losses) on the income statement, less (plus) (5) income from nonconsolidated entities, plus (6) distributions from unconsolidated entities.
In my opinion, the CCPT3 is as close to a ponzi scheme as you can get. Very little money coming in from operations and paying out almost 7% dividends to "old" investors from money coming in from "new" investors. It appears that in the third quarter 2010, CCPT3 paid $74 million to its investors. But Funds From Operations were reported only at $12 million. Where did that dividend money come from? The only place it could, and that's new investors buying shares.
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