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Industry Discussions / Real Estate Inv. Trusts: REITs


Subject:  Re: Diversity Fund Date:  8/12/2020  4:54 PM
Author:  BruceCM Number:  86284 of 86356

I read through their web site and from it, this is what I think is going on

This is a publicly traded REIT, not Private and not exchange traded.

Per the annual REIT >= 90% of taxable income distributions rule, distributions are made and if in a taxable account will be income to the account holder, but they are required to be reinvested.

The 'maturity' period is projected to be 5 years when apartments will be sold (liquidity event) and, I'd image, the proceeds are distributed as partly return of capital and partly capital gains. While being operated, the first 7% of 'profits' each year (REIT Taxable Income or GAAP income??) goes to investors, then the 'profits' are divided 65% investors and 35% management up to 12% return for the year and thereafter, the 'profit' is split 50-50. At least that's how I read it to work.

My assessment: don't go there.

Any time you get off the grid, you run the risk of getting fleeced. Like the roach motel, its easy to get in but ner' impossible to get out until you're let out. In the meantime all you can do is watch and management will do whatever it is they wish to do....and most of the time, from my readings, it does not go as you thought it would.

The power of buy and sell orders cannot be over-emphasized. When you go off the grid, you give up this right, and management knows this. Its not a good position to be in.

Stick with individual REITs, REIT funds and REIT ETFs you have the discretion to buy and sell as you see fit.

Oh, and a minor point....its 'Diversy', not 'Diversify'.

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