American Property Trust, an Irvine-based real estate investment trust, Tuesday said it has filed a registration statement with the Securities and Exchange Commission covering a proposed $75-million public offering of preferred and common stock.
The offering is the latest in a long line of new real estate investment trusts, or REITs, to make public offerings this year. REITs are companies that pool shareholders' money to buy or finance shopping centers, office buildings and other income-producing properties. They are required to pay 95% of their profits in dividends.
William Balch, executive vice president of American Property, said the trust will be underwritten by American Real Estate Securities Inc. and about "50 to 100" other companies.
Resurgence in Popularity
REITs are experiencing a resurgence in popularity after being viewed as a financial scourge of the mid-1970s when many collapsed and investors lost billions of dollars.
In this case, American Property Trust will invest primarily in joint venture development projects in California, Texas, Florida and North Carolina.
The $75-million offering consists of 5 million shares of preferred stock at $10 a share and 4.2 million shares of common stock at $6 a share.
Balch said he expects SEC approval for the offering by the end of the year.
The Orange County businessman was formerly the president of Wespac Financial Marketing, a real estate syndication firm in Newport Beach. Before that, he served as the executive vice president and sales manager of the public real estate marketing effort for New York-based Integrated Resources Corp.
Balch said he expects to raise the money over a two- to three-month period once the SEC allows the prospectus to go public.
"All of the properties are identified," said Balch. "It is not a blind pool and so people know exactly what they are investing in."
He said that by offering two classes of stock--preferred and common--investors are able to custom-tailor their investments to suit their needs.
"The preferred side is designed especially for income-oriented investors, people who depend on a monthly distribution dividend or tax-exempt entities such as IRAs, KEOGHs or pension plans," said Balch. "It is fully taxable with a higher yield."
"The common side," he added, "is designed to be substantially sheltered from ordinary taxable income but has a somewhat lower monthly dividend (and) a higher capital-appreciation potential."