Wells REIT II sent a letter
to investors with an updated share valuation. At $7.47 per share, the
new value reflects a significant decline from both the offering price of
$10.00 and the DRIP price of $9.55. It is also notably lower than the
estimate share value estimate I gave in an earlier post.
Wells
is due some credit for accepting the consultant's valuation
unmodified. The REIT was formed and was making significant acquisitions
during a real estate market that was much more robust than current
conditions. Valuations are bound to be lower than par, given the legacy
properties in the portfolio.
Unfortunately, the new valuation is also consistent with investor experience with Wells programs. Investors receive an attractive income stream, but then are subject to a negative surprise on a revaluation or liquidity event.
Special thanks to the Rational Realist.
No comments:
Post a Comment