The non-traded real estate investment trust known as the Wells Timberland REIT recently lowered its stock valuation by 35% to $6.56 per share. When shares of the REIT were offered to the public in 2006, the price was $10 a share.
As reported Dec. 17 by Investment News, the company blames the REIT’s 35% drop in value on the economic downturn and continued problems in the housing industry.
Wells Timberland REIT is sponsored by Wells Real Estate Funds, one of the biggest players in the non-traded REIT industry. According to Wells’ corporate Web site, the company has invested more than $11 billion in real estate for more than 300,000 investors.
As noted in a letter sent to stockholders last week by Wells President Leo Wells III, the $6.56 estimate for common shares was based on information as of Sept. 30. However, investors in the Wells Timberland REIT might find it hard to actually get that price in the market based on the illiquid nature of non-traded REITs.
Last October, the trust suspended redemptions of shares until the new estimate of share values was completed. Beginning in January, shareholders should 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 also has not made any ordinary share redemptions, according to the Investment News article.