The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Wells' Real Estate Nixes REIT Fee Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, July 11, 2012

Wells' Real Estate Nixes REIT Fee

News summary by MFWire's editors

Wells Real Estate Trust, a prominent sponsor of nontraded REITs, will forgo charging a controversial fee to its REIT investors, InvestmentNews reported. [SEC filing]

Charging an "internalization fee" -- a fee for the REIT to acquire its advisor after the advisor's contract expires, thereby making the REIT self-managed -- has been the industry standard for a decade. But this fee is typically not fully disclosed in trusts' offering documents, and there have been notorious examples of REITs paying high internalization fees that angered investors and, in some cases, have resulted in lawsuits.

In 2007, Inland Western REIT paid $375 million for its advisor, later reduced to $285 million after a lawsuit.

That same year, Wells Real Estate Trust paid about $175 million for its advisor, according to InvestmentNews.

The article quotes the blunt assessment of Nicholas Schorsch, chairman and CEO of American Realty Capital: "This [fee] made no economic sense to investors. There's no logical reason they would pay."

The SEC filing for Wells' $6.2 billion Wells REIT II said that there would be no payment to acquire its advisor. And this shift by Wells, which manages $11 billion in total, may suggest a change in practice across the REIT industry.

"Wells was forced to go this route because of competitive pressure," Daniel Wildermuth, CEO of Kalos Capital, told InvestmentNews.

"If Wells had done anything else, they would have opened themselves up to a lot of criticism." 

Edited by: Chris Cumming

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

©All rights reserved to InvestmentWires, Inc. 1997-2019
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use