On December 14, 2012, Wells Timberland REIT Inc’s board of directors issued a new estimated value of the real estate investment trust’s common stock. Wells Timberland REIT is now valued at only $6.56 per share. In 2006, when the REIT was launched, the public offering price of the shares was $10, so the new estimated per share value represents a 35% decline. In addition, because the product is illiquid in nature, securities arbitration lawyers say it could be difficult for investors to get $6.56 per share in the market.
The Timberland REIT’s Securities and Exchange Commission 8-K filing stated that the fund has $11.70 per share in timber assets, $0.28 per share in other net assets, and $5.42 per share in preferred equity liabilities and debt. Reportedly a certified public accounting firm and a forest consulting firm’s appraisal information was used by the board of directors in determining the per share price, but the estimate itself was made by the board of directors.
Starting in January, Timberland REIT investors will supposedly be able to redeem their shares for $6.23, or 95% of the product’s estimated value. However, investment fraud lawyers say that no cash distributions have been made, redemptions are funded out of the REIT’s “distribution reinvestment plan” and, reportedly, no ordinary share redemptions have been made.
Wells Real Estate Funds, sponsor of the REIT, is one of the biggest firms in nontraded REITs. Previously, the Financial Industry Regulatory Authority fined an affiliate of Wells Real Estate Funds, Wells Investment Securities Incorporated, $300,000 for the use of misleading marketing materials in the sale of Wells Timberland REIT from May 2007 until September 2009. According to FINRA, 116 “improper, unwarranted or exaggerated statements” were included in the advertising literature. Some of these statements were about the distributions, redemption, and diversification of the non-traded REIT. According to investment fraud lawyers, because of these misleading sales practices, many individuals invested in the REIT who would not have done so otherwise.
If you suffered significant REIT losses as a result of your investment in Wells Timberland REIT, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.