CHICAGO--(BUSINESS WIRE)--As Inland American Real Estate Trust prepares for significant changes in order to position itself for liquidity, UNITE HERE released a report questioning whether investors will be asked to pay hefty fees as the Trust unwinds its structure.
In its report, UNITE HERE recommends that Inland American terminate its external management agreements, hire an experienced management team, and become self-managed at no upfront cost to stockholders.
Nearly $1.4 billion in fees have already been incurred for the benefit of Inland insiders, according to UNITE HERE. Inland American is the largest of several non-traded, “private” REITs sponsored by The Inland Group. Like its sister vehicles, Inland American’s structure is dependent on privately-held external advisors, which are owned by The Inland Group’s four principals. Inland is currently fundraising for an institutional fund, Inland Retail Property Fund, and another private REIT.
The report provides a detailed look at Inland American’s externally-managed structure and the fees that accompany it. It also compares Inland American to CNL Hotels as an example of what not to do while preparing for liquidity. The majority of key personnel at Inland American’s lodging segment hail from former CNL Hotels’ management, UNITE HERE notes.
CNL Hotels, structured like Inland American, consolidated its structure by “buying out” its expensive external manager in order to execute its exit strategy. CNL’s IPO got shelved. The costly buyout of its external manager contributed to a class action lawsuit, and CNL’s exit was delayed.
To view or download the free report, go to http://www.inlandinvestoralert.org/reports/