The board of directors for Wells Timberland REIT, Inc. (“Timberland REIT”) announced that they had determined the estimated value of the non-traded real estate investment trust (“REIT”) to be $6.56 per share. The shares were initially offered to the public in 2006 at $10 per share. The board blamed the 35% decline in value on the housing industry.
In October, trading in the Timberland REIT was suspended until the new estimated share price was announced. According to InvestmentNews, in January 2013, investors will theoretically be able to redeem their shares for $6.23, 95% of the estimated value. However, due to the lack of a ready market for non-traded REITs, investors may have difficulty finding a buyer for their shares. According to the Form 8-K filed with the Securities and Exchange Commission, the Timberland REIT has reserved $150,000 per month for emergency redemptions due to an investor’s death, disability or commitment to a long-term care facility.
The Financial Industry Regulatory Authority (“FINRA”) previously fined the Georgia-based brokerage firm Wells Investment Securities, Inc. (“Wells”) $300,000 for misrepresentations made in connection with sales of the Timberland REIT. Wells was the wholesaler for the Timberland REIT which invested in timber-producing land. As the wholesaler, Wells reviewed, approved and distributed marketing materials about the product. The investigation conducted by FINRA found misrepresentations in the advertising and marketing materials distributed by Wells concerning the Timberland REIT.