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I recently (last few days)sold some WGCBP in my E*TRADE account and have had no problem with restrictions.
Have been following this saga for years despite having only a few hundred shares.
Apparently, for some unknown reason, my shares had a restrictive legend placed on them making it impossible to trade them until it is removed.
Since the shares are in an IRA, I do not have physical possession. The custodian has requested a whole bunch of paperwork and is indicating that I may face a $1000.00 fee for their work. The entire position is 400 shares.
Anyone else have a restrictive legend?
Anyone else have such a legend removed?
Anyone know when the legend was added?
Any advice appreciated.
Regards
The Tip
Last Friday's edition of Commercial Mortgage Alert suggests the following:
"Deutsche Bank and Goldman Sachs have agreed to provide a hefty floating-rate loan to a Goldman fund on the former Equity Inns hotel portfolio. The fund, which controls the REIT that acquired Equity Inns seven years ago, needs to retire a big chunk of debt — believed to be in the neighborhood of $1.25 billion. Although the exact size of the new loan couldn’t be learned, it apparently would be big enough to retire most or all of the existing debt."
One might logically assume that the use of these proceeds would go to retire the traditional debt in-place as well as retire the prefs plus accrued in order to clean-up the capital structure for an eventual exit. Given Goldman's basis in the ~60%+ of the preferred float that they own, they would be DPO'ing at a substantial basis (or paying themselves back a very hefty return).
Both preferred issues set new 52-week highs today.
My guess is that GS keeps up the slow, illegal insider buying sin the hope that they can tease the preferred shareholders out of the stock, so that the class actions go away. But I am hanging on to mine until I see somebody's ass in jail, or until I see $25+cumulative dividends.
The US and GS in particular needs to be cleaned up.
New 52 Week Highs on both the Series B and Series C Preferred Shares (symbols WGCBP and WGCCP, respectively).
Anybody know what is going on with these securities? Any word around the campfire on W2007 Grace's Preferred shares?
Thanks in advance,
David (aka, MrchntDeth)
Does GS think they're TOO BIG TO JAIL?
While there are admittedly risks in any investment, GS pointing to the small print in the prospectus does not give the officers of a company the right to DELIBERATELY destroy the value of an investor's investment. They always have a legal, fiduciary duty to do the BEST THEY CAN for their investors, and especially towards minority shareholders, where the obligation of fiduciary duty is even stronger.
I would like to see some people jailed for this. Hopefully the SEC/Justice department will take it up after the civil class action cases have been won to recompense shareholders for GS shenanigans.
Hi EI,
I sent you a message on a different board, but about the same company.
When you say "Big Mistake," what was that in reference to?
Was it that Goldman had made a Big Mistake, and that they are screwed? Was the "Big Mistake" in suggesting that they might be making a tender offer for the rest of the shares that they were not able to buy on the sly?
Would love to get your take on this company (WGCBP/WGCCP).
Thank you,
d.
Big mistake.
PFD has also informed the Company of its intention to consider a tender offer for the remaining preferred shares of the Company later in 2013.
Things are really starting to heat up now.
Truly expected a tender offer from PDF Holdings LLC prior to year end. Not anymore. The best GS et al can look forward to is quickly reaching a settlement that excludes the respective firms from admitting guilt.
My expectations:
(1) payment of all accumulated dividends
(2) company will hold a special meeting to appoint two directors to represent outside preferred shareholders
(3) plaintiffs receive their reasonable costs and expenses
As a result of the blatant illegal repurchase of 58.8% of the preferred for a deliberately suppressed price, two substantially identical class actions have been filed (which will probably be merged) on behalf of all current and former preferred stockholders of W2007 Grace and Equity Inns.
You can read the complaint here:
http://www.chimicles.com/wp-content/uploads/2013/10/W2007-Grace-Amended-Complaint.pdf
W2007 Grace Acquisition I, Inc Third Quarter 2013 Dividends (9/30/13)
IRVING, TX — September 30, 2013 — W2007 Grace Acquisition I, Inc. today announced that it will not declare a third quarter 2013 dividend with respect to the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock in connection with certain covenants contained in the loan documentation put in place in October 2007.
Please refer to the Amended and Restated Charter of W2007 Grace Acquisition I, Inc. for a description of the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock.
CONTACT: W2007 Grace Acquisition I, Inc.
Dan Smith
Tel: (972) 368-2081
http://www.snl.com/Cache/1500052653.PDF?Y=&O=PDF&D=&FID=1500052653&T=&IID=103147
W2007 Grace Acquisit (WGCBP)
$9.5 down -1.5 (-13.64%)
8/15/2013 12noon PST - It just went On Sale!
PFD Holdings, LLC owns 58.8% of Preferred Shares (8/13/13)
IRVING, TEXAS — August 13, 2013 — W2007 Grace Acquisition I, Inc. (the “Company”) today announced that PFD Holdings, LLC (“PFD”), an affiliate of the Whitehall funds, notified the Company that it has recently acquired 24.3% of the aggregate amount of issued and outstanding Series B and Series C preferred shares of the Company, which acquired shares remain outstanding. PFD now owns 58.8% of the outstanding preferred shares.
PFD has also informed the Company of its intention to consider a tender offer for the remaining preferred shares of the Company later in 2013.
In light of these events, the Company has postponed the special meeting of the preferred shareholders for the purpose of electing two additional directors to the Company’s Board of Directors.
The Amended and Restated Charter of W2007 Grace Acquisition I, Inc. is available on the Company’s website, www.equityinns.com, and contains a description of the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock.
CONTACT: W2007 Grace Acquisition I, Inc.
Dan Smith
Tel: (972) 368-2081
http://www.snl.com/Cache/1001178118.PDF?Y=&O=PDF&D=&FID=1001178118&T=&IID=103147
Shareholder Meeting 8/27/13 at 11:59.
https://east.virtualshareholdermeeting.com/vsm/web.do?pvskey=pansoft11
WGCBP close on 6/27/13 at $10.05
WGCBP
USD W2007 Grace Acquisition I Inc
Last [Tick] $10.05[+]
Change Up $0.25
% Change Up 2.55%
Open $8.85
Volume 17,600
Day High $10.05
Day Low $8.55
I don't follow the author here:
The preferred shares seem to have an interest in only 1 percent of the assets. If Goldman could find a way to put the 1 percent owner in bankruptcy, while keeping the other 99 percent out, it might be able to largely eliminate the preferred.
Even that might not be necessary. Goldman was also the lender in the deal, and perhaps it could restructure the debt in ways that would essentially give the debt holders — Goldman, that is — the ability to get everything, leaving the preferred shareholders with nothing.
Going Dark, and Putting Blindfolds on Investors
By FLOYD NORRIS
New York Times
What happens to investors who buy securities issued under the protection of United States securities laws and continue to hold them after many of the protections are removed? Sometimes it is not pretty.
That is happening more and more often as companies avail themselves of the right to “go dark” because they do not have very many public shareholders. They no longer have to file financial information with the Securities and Exchange Commission, but the securities are still publicly traded.
These days, such investors seem to have few friends. Congress is much more interested in making it easier for companies — or “job creators” in the current jargon — than it is in protecting unfortunate investors. The so-called JOBS Act, enacted last year with widespread bipartisan support, included a provision making it much easier for small banks to go dark, and hundreds have done so.
Going dark, it should be noted, is not the same thing as going private. When that happens, securities are purchased from the public investors. They may not like being forced out, but they are out.
Not so when a company goes dark. The investors are in, but they may or may not be told what is going on. Companies that go dark sometimes make audited financial statements public, and sometimes they do not.
There is no better example of the perils of going dark — as well as proof that “preferred” can be a misnomer when it comes to stock — than the former Equity Inns, an owner of hotels, whose common shares were acquired by Goldman Sachs in 2007.
Although the common shares went away, preferred shares remained — or actually, new issues of preferreds replaced old ones. What has happened since then “smells like insider trading,” says James J. Angel, a finance professor at Georgetown University and an investor in the preferred stock. Goldman says that is nonsense.
While Goldman acquired the common stock, for $23 a share, or $1.9 billion, it did not acquire the $146 million of preferred shares in public hands. Those shares were in par values of $25 and had been sold primarily to individual investors interested in collecting a reasonably safe income stream. One series paid 8.75 percent a year, and the other 9 percent.
Before the takeover, those shares had been trading above par, and Goldman could have called them at par value. Instead, it took the preferred shares into the dark. The company assured the S.E.C. that there were fewer than 300 shareholders of record for each series of preferred, giving the company the right to go dark. The securities continued to trade over the counter in what Wall Street calls the “gray market.”
Goldman soon halted the dividend payments, and the share prices fell to as little as a penny.
How was the company doing? The financial statements were confidential, but Goldman did agree to let preferred shareholders see them — for a fee — as long as they signed confidentiality agreements that would prevent them from sharing the statements with anyone else, including prospective buyers of the shares.
Someone has, however, violated that confidentiality agreement. After I began calling around for this column, a set of financial statements arrived in an envelope with no return address. Assuming they are accurate, they show that over the three years through 2012, the company had net losses of $315 million on revenue of $1.2 billion. But most of those losses came from $251 million in depreciation. Operating cash flow was a positive $174 million. Told of some of the numbers in the statement, a Goldman spokeswoman did not dispute them.
Those numbers, however, are for the entire company. The preferred shares seem to have an interest in only 1 percent of the assets. If Goldman could find a way to put the 1 percent owner in bankruptcy, while keeping the other 99 percent out, it might be able to largely eliminate the preferred.
Even that might not be necessary. Goldman was also the lender in the deal, and perhaps it could restructure the debt in ways that would essentially give the debt holders — Goldman, that is — the ability to get everything, leaving the preferred shareholders with nothing.
Evidently, few saw any value in the preferred shares. But then prices began to rise, and in September the company disclosed that “a sister company” — presumably another Goldman affiliate — had “recently” acquired “approximately 35 percent” of the outstanding preferred shares. This week Goldman told me that it bought all of the shares in one private transaction from a single seller. It would not identify the seller or the price, but said it had not made any further purchases or sales since then.
The September purchase amounted to about as many shares as had traded in public markets in the previous six months. It is not clear when the seller accumulated them, and Andrea Raphael, a Goldman spokeswoman, denies there was any advance agreement to purchase them. Mr. Angel sees evidence of a violation of insider trading laws, but Ms. Raphael says that is ridiculous.
“We complied with applicable law in all respects,” she said. “Any assertions otherwise are based purely on speculation.”
If the company — whose formal name is now W2007 Grace Acquisition I — were still registered with the S.E.C., and the preferred shares traded on an exchange, we would not have to wonder about this. Anyone who acquired more than 5 percent of the issue would have been required to disclose that fact — as well as the prices paid for recent purchases. But such protections for investors vanish when a company goes dark.
The fact of the purchase breathed new life into the shares. If Goldman, which controls what will happen, saw value in the preferred, surely there was value, or so some traders evidently concluded. The price, which had risen to $4 from about $2 in the months before the disclosure, has now climbed to about $9.
This has become news now because one preferred shareholder, Joseph M. Sullivan, a Sacramento accountant, took it upon himself to assure that the preferred shares had more than 300 owners of record. In December, he set up 301 separate trusts to hold his shares, each of which he said had different beneficial owners but the same trustee — himself. He demanded that the company file its financial statements with the S.E.C.
In April, a lawyer for Goldman, William G. Farrar of Sullivan & Cromwell, asked the S.E.C. to issue an order exempting the company from any need to file with the commission. The issuer of the preferred shares, he explained, was “simply a real estate investment firm with a small economic interest in 130 hotels and no employees” and Mr. Sullivan was engaging in subterfuge to force the company to resume its filings.
The S.E.C. chose to ask for public comment on the request, bringing letters of protest from a number of shareholders, including Mr. Sullivan, who told me he would disclose the identities of the beneficial holders to the S.E.C., but only if it promised not to make them public.
There is no question that the level of 300 owners of record is a magic number in determining whether the company must resume filing with the S.E.C. There is no doubt that there are more than 300 beneficial owners even without counting Mr. Sullivan’s trusts. But the rules allow companies to ignore many such owners if all their shares are held at the same brokerage firm. Mr. Sullivan would like the S.E.C. to make it harder for companies to go dark and stay dark.
Even if he prevails in that, it is far from clear what he will have accomplished. Public filings would make it easier to see what was going on, but Goldman would still have all the cards and might find ways to assure that the preferred holders received little or nothing from their investment.
There is one sidelight to this that emphasizes how convoluted it can be when a company has public investors but chooses to keep the public in the dark. The company’s charter, available on its Web site, seems to say no one can buy more than 9.9 percent of the preferred shares. But the Goldman affiliate did. The rules do not apply if the company gives up its tax status as a real estate investment trust, or REIT, but nothing I could find on the Web site indicates that happened. In his letter to the S.E.C., Mr. Farrar, the lawyer for Goldman, referred to the company’s “REIT sub,” short for subsidiary, which sounds as if it is still a REIT.
Not so, Goldman assured me. The company gave up its REIT status years ago and disclosed that in financial statements that are not public.
So why did Mr. Farrar use the language he did?
“Historically it was referred to internally as the ‘REIT sub’ and we simply continued that reference,” Ms. Raphael said. “The reference is not indicative of the company’s tax status.”
A version of this article appeared in print on June 14, 2013, on page B1 of the New York edition with the headline: Going Dark, And Putting Blindfolds On Investors.
Prediction: Tender Offer
Now that this news has finally hit the financial press, the easiest way to make the financial reporting problem go away is for Sister Co. to buy up shares in a tender offer. It won't be easy. Some lowball offer may attract some shares, but most holders will hold out.
Its' about time the WSJ gave this some exposure!
Seeking Alpha had exclusive content and didn't know it!
Hotel Deal Sparks Feud Over Preferred Shares (6/13/13)
Value of Equity Inns' Preferred Shares Dropped After Goldman Fund Bought the Hotel Owner
By Craig Karmin and Liz Moyer
Some preferred shareholders in hotel owner Equity Inns were hoping that a $2.2 billion acquisition by a Goldman Sachs Group Inc. real-estate fund would mean a nice payout alongside the common stockholders, who got a hefty premium.
Instead the value of the preferred shares has plunged. Goldman says that is because the preferred shareholders didn't read the small print. The investors say it is because the company and Goldman overstepped their authority.
At the heart of the dispute is a reorganization from the 2007 acquisition. Equity Inns exchanged the publicly traded preferred shares for unlisted ones. Preferred shares get preference over common shares in a liquidation but they usually lack voting rights.
The company also stopped filing financial reports and a few months later, it suspended the dividend paid to preferred shareholders.
Preferred shares were trading above $25 at the time of the merger's announcement and fell as low as 5 cents each in 2009. Now they're worth around $9 each.
A Goldman spokeswoman said the risk was spelled out in the company's preferred shareholders' prospectus. The documents say that these investors could lose their "protection in the event of a highly leveraged or other transaction, including a merger" or sale that "might adversely affect" the preferred shareholders.
Preferred shareholders, however, are crying foul. They say that the hotel company had no authority to convert publicly listed preferred shares to unlisted preferred shares that are worth less because of their illiquidity.
They're also unhappy because a Goldman affiliate purchased two million preferred shares last year when the shares were trading on the OTC Bulletin Board at around $4 per share. They say that is not fair because Goldman has better access to the company's financial information than they do. Goldman declined to comment on those shareholder complaints.
"When shareholders need to sell, the only buyers are the corporate insiders who know what is actually happening inside the company," Georgetown University finance professor James Angel, a preferred shareholder, wrote to the Securities and Exchange Commission.
The issue has heated up in recent weeks because the SEC, at the hotel company's request, is considering whether to instruct the hotel company to start filing financial reports for the benefit of the preferred shareholders. An SEC spokeswoman declined to comment on the status of the case.
The dust-up is the latest example of the hazards that sometimes face preferred shareholders. They typically get paid before common shareholders when things go wrong. But they can find themselves stuck when things go right and the company attracts a new owner.
In 2009, after private-equity firm Green Courte Partners acquired American Land Lease Inc., a manager of residential land-lease properties, it stopped providing financial information to the preferred shareholders. DRA Advisors suspended the preferred shareholders' dividend after taking over CRT Properties Inc., which owned 137 office buildings, in 2005. The companies didn't respond to requests for comment Wednesday.
In the case of Equity Inns, some shareholders acknowledge they should have paid closer attention to the reorganization. "Most of the shareholders were inert," Mr. Angel says. "As long as we're being paid dividends, what's there really to worry about?"
Based in Germantown, Tenn., Equity Inns was founded in 1993 and grew to become the third-largest U.S. hotel real-estate investment trust. With about 130 properties in 35 states, it owned a mix of extended-stay and select-service hotels carrying names such as Marriott Courtyard and Residence Inn.
The REIT issued a series of preferred shares to raise money for acquiring many of these hotels, and at one point the preferred shares accounted for about a third of the company's total shareholder equity.
In June 2007, one of Goldman's Whitehall funds agreed to acquire the company, offering common stockholders 19% more than the share price at the time. A few weeks later, Equity Inns said the preferred shares, which traded on the New York Stock Exchange, were being swapped for unlisted preferred stock in the new company.
Some preferred shareholders sued in Tennessee court in 2007, claiming the board breached its fiduciary duty to the preferred holders by causing their shares to fall in value. They weren't able to block the acquisition. But in April, a Memphis court approved a class-action status for the lawsuit. The company said it believed the lawsuits were without merit.
The company has argued that it doesn't need to submit financial reports to the SEC partly because there is a "limited trading interest in the Company's preferred stock."
This frustrates the preferred shareholders who claim that the limited trading is largely because the company makes it so difficult for the public to obtain financial information. For preferred holders to get data, they have to make a written request, pay a small fee and agree that all company information remain confidential.
Those conditions discourage outsiders from buying shares in a company where basic financial information is unattainable, "either independently or from a shareholder interested in selling," Charles Reaves, an attorney who represents a preferred owner, wrote to the SEC.
The hotel company also has told the SEC that it shouldn't have to file financial reports because the company has fewer than 300 shareholders. That falls below the usual SEC threshold for public filings.
One of the preferred shareholders is responding by creating 300 separate trusts to hold his preferred shares. He argues that should qualify the company for reporting.
http://m.us.wsj.com/articles/a/SB10001424127887324049504578541603072663338?mg=reno64-wsj
Todays close at $9 is 6 year high.
Things are really looking up now.
White Bay Capital Management, LLC letter to SEC:
http://www.sec.gov/comments/81-939/81939-12.pdf
Notice of an Application of W2007 Grace Acquisition I, Inc. under Section 12(h) of the Securities Exchange Act of 1934 (4/30/13)
http://www.sec.gov/rules/other/2013/34-69477.pdf
A valiant attempt by the White Bay Capital represenative, but I have a hard time believing Goldman Sachs is going to get screwed by a judge.
Sullivan & Cromwell LLP letter to SEC:
http://www.sec.gov/rules/other/2013/34-69477-application.pdf
It looks like something is brewing here:
http://www.sec.gov/comments/81-939/81-939.shtml
Things Are Looking Up For W2007 Grace Acquisition I, Inc. Preferred Holders
[....]
Analysis
Grace will benefit from industry-wide macro trends. The construction of new hotel rooms remains at historic lows and will most likely remain low for some time. This lack of new competition allows existing hotels to raise room rates as the economy slowly improves. The properties become valuable.
At some point, Whitehall will be looking for an exit strategy. It may take several more years. However, it appears that work has already begun.
Grace announced on September 17, 2012 that a sister company had acquired approximately 35 percent of the outstanding Series B and Series C preferred shares. The release went on to say that this sister company and its affiliates (including Grace) may also from time to time consider entering into one or more other transactions with respect to the company, including the acquisition or disposition of securities of, or interests in, the company (including additional transactions with respect to the Series B and Series C preferred shares).
[....]
These two series of preferred stock stand in the way of Whitehall monetizing its investment in Grace. It is also not hard to envision the sister company or even Grace announcing a tender offer to buy preferred shares at a discount from liquidation value (par plus accrued dividends) down the road.
[....]
http://seekingalpha.com/user/624331/instablog
Yet again...
W2007 GRACE ACQUISITION I, INC. FIRST QUARTER 2013 DIVIDENDS
IRVING, TX — March 28, 2013 — W2007 Grace Acquisition I, Inc. today announced that it will not
declare a first quarter 2013 dividend with respect to the 8.75% Series B Cumulative Preferred Stock
and 9.00% Series C Cumulative Preferred Stock in connection with certain covenants contained in the
loan documentation put in place in October 2007.
Please refer to the Amended and Restated Charter of W2007 Grace Acquisition I, Inc. for a description
of the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock.
CONTACT: W2007 Grace Acquisition I, Inc.
Dan Smith
Tel: (972) 368-2081
Um....was that a $13.00 print I saw yesterday?! That's over 50% of face...going to be at $25 by April at this rate lol.
Wish they would reinstate the dividend or something, because I feel all these 52 week highs since September is setting me up for a big disappointment.
The price action all changed when that sister company bought a bunch of shares last September.
Really missed a money-making opportunity here.
W2007 GRACE ACQUISITION I, INC. SERIES B AND SERIES C PREFERRED SHARES IRVING, TX (9/17/12)
W2007 Grace Acquisition I, Inc. (the “Company”) today announced that a sister company of the Company has recently acquired approximately 35% of the aggregate amount of issued and outstanding Series B and Series C preferred shares of the Company, which acquired shares remain outstanding. That sister company and its affiliates (including the Company) may also from time to time consider entering into one or more other transaction with respect to the Company, including the acquisition or disposition of securities of, or interests in, the Company(including additional transactions with respect to the Series B and Series C preferred shares of the Company).
The Amended and Restated Charter of W2007 Grace Acquisition I, Inc. is available on the Company’s website, www.equityinns.com, and contains a description of the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock.
http://www.snl.com/Cache/1001168964.PDF?D=&O=PDF&IID=103147&Y=&T=&FID=1001168964
Could you please elaborate on the "sister company" buying WGCCP shares? I feel I may have missed something.
W2007 GRACE ACQUISITION I, INC.
SERIES B AND SERIES C PREFERRED SHARES
IRVING, TX — September 17, 2012 —
W2007 Grace Acquisition I, Inc. (the “Company”) today announced that a sister company of the Company has recently acquired approximately 35% of the aggregate amount of issued and outstanding Series B and Series C preferred shares of the Company, which acquired shares remain outstanding. That sister company and its affiliates (including the Company) may also from time to time consider entering into one or more other transaction with respect to the Company, including the acquisition or disposition of securities of, or interests in, the Company(including additional transactions with respect to the Series B and Series C preferred shares of the Company).
The Amended and Restated Charter of W2007 Grace Acquisition I, Inc. is available on the Company’s website, www.equityinns.com, and contains a description of the 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock.
www.snl.com/Cache/1001168964.PDF?D=&O=PDF&IID=103147&Y=&T=&FID=1001168964
Received 2011 financials a couple months back (late).
Since holders are bound not to share information, I can only suggest everyone order a package when available.
Could you please elaborate on the "sister company" buying WGCCP shares? I feel I may have missed something. Investing for me is a full time, part-time job. However, my job in mortgage tends to be full-time job times two. Everyone on my team is up to our eyeballs in HARP loans.
I, like many others, took a big hit on EHPTP.
This deal is different in one major way - Goldman Sachs Mortgage Company totes the note.
Any idea what's going on the past few months EI? Ever since the "sister company" bought all those WGCCP shares these things seem to be setting new 52's and multi year highs on a daily basis. I'm skeptical because of how EHPTP turned out, but maybe something is going on here?
STR releases updated 2013, 2014 forecasts (1/23/13)
HENDERSONVILLE, Tennessee—The U.S. hotel industry expects to see performance increases during 2013 and 2014, according to the most recent forecast from STR, in partnership with Tourism Economics.
Overall, in 2013 occupancy is expected to rise 0.8 percent to 61.9 percent, average daily rate is forecasted to increase 4.9 percent to US$111.27 and revenue per available room is expected to grow 5.7 percent to US$68.86.
“Pretty much across the board you can see that all of the segments had a very nice rebound in demand,” said Randy Smith, co-founder and chairman at STR, on Tuesday during the Americas Lodging Investment Summit. “Taking a look at the occupancies and ADRs, this is just about as good as we can hope for it to be. All of the segments are seeing very solid increases in occupancy and ADR. Getting into our forecast, where we are at this point, we do not expect supply growth to be an issue. We’re a little bit more positive this year than last year on ADR growth.”
The forecasted ADR would surpass the 2008 peak level (US$107.41), and the projected RevPAR would surpass the 2007 peak level (US$65.56).
Supply in 2013 is forecasted to rise 1.0 percent, and demand is projected to be up 1.8 percent.
The forecast for 2014 includes:
•a 1.3-percent increase in occupancy to 62.7 percent;
•a 4.6-percent rise in ADR to US$116.43;
•and a 6.0-percent growth in RevPAR to US$72.97.
In 2014, supply (+1.5 percent) and demand (+2.8 percent) are both projected to increase.
Media Contacts:
Jeff Higley
VP, Digital Media & Communications
jeff@str.com
+1 (615) 824-8664 ext. 3318
Rachael Spann Urie
Director, Public Relations
rurie@str.com
+1 (615) 824-8664 ext. 3305
http://www.hotelnewsnow.com/Articles.aspx/9764/STR-releases-updated-2013-2014-forecasts
I'm so sick of how they operate now with "illiquid" and OTC stocks. It seems to really only be since TradeKing and Zecco merged that this has happened. It's weird to own positions that you can't exit easily, or to want to buy even a small number of shares but can't due it violating some liquidity trading rule. I want to move my account, thinking Interactive Brokers maybe.
Good luck in 2013 one and all!
No issues with Fidelity.
Where do you hold shares through (if you do)? I've been trying to find a way to sell some of mine, but TDA/Tradeking won't allow me to sell w/o the big fees.
Revised Shareholder Request Form (10/12):
http://www.snl.com/irweblinkx/file.aspx?iid=103147&fid=1001169801
Frequently Asked Questions (updated 9/28/12):
http://www.snl.com/irweblinkx/file.aspx?iid=103147&fid=1001169213
Hotel Construction Sees Comeback in U.S. (9/19/12)
By KRIS HUDSON
U.S. hotel construction, which dropped sharply during the economic downturn, has staged a modest turnaround, buoyed by building booms in New York as well as in small towns crowded with workers drilling oil-shale formations.
In the past four quarters, construction starts for U.S. hotels are up 32% by room count from the same period a year ago, and new-project announcements are up 22%, according to Lodging Econometrics, which tracks the hotel industry globally. Fueling the construction rebound are rising occupancy and room rates at U.S. hotels since 2009 and a willingness by more lenders to make hotel-construction loans, typically the most volatile and risky of commercial real-estate classes.
The average U.S. room rate of $105.53 in the first seven months of this year marks a 6.6% increase from the same period in 2009, according to Smith Travel Research. Average occupancy increased in the same span by nearly seven percentage points to 62.3%.
The pickup in hotel construction is a mixed signal for the industry. Although it is viewed as a sign that developers are confident about the economy's prospects and about consumers' willingness to travel, some owners of existing hotels worry that too many new hotels can lead to lower room rates in the future.
But so far, analysts say the new construction cycle isn't likely to lead to an oversupply of rooms, coming after nearly three years of declines in construction. At the end of the second quarter, developers had 474 hotels, totaling 60,000 rooms, under construction in the U.S. That is up from 437 hotels and nearly 55,000 rooms in the previous year. New-project announcements in the past year totaled 1,180 hotels, up from 926 in the previous year.
"Very modestly and very quietly, a new [construction] cycle has begun," said Patrick Ford, president of Lodging Econometrics. The company predicts a steady rise in new hotel openings through 2014.
New York remains by far the most-active market for hotel construction with 7,248 rooms being built, amounting to roughly 11% of the national total. Though the city's room count grew 7% in 2010 and 2.3% last year, its occupancy has remained above 80% since 2010. "New development is not catching up with the increase in demand," said Issac Hera, chief executive of Brack Capital Real Estate USA, which is developing three hotels in Manhattan.
A similar hotel boom is unfolding in a far different locale: rural communities atop oil-shale formations being drilled for oil and natural gas. Of the top 10 U.S. markets for hotel construction in the past year, three are in oil-shale areas: North Dakota, with 2,088 rooms under construction; the greater Corpus Christi area in Texas, with 1,491 rooms; and rural Oklahoma, with 1,242 rooms.
Most developers in these smaller markets are building budget and midscale hotels to accommodate oil-shale workers and other energy-industry employee. The hotels are needed in these areas to house the many workers, from engineers to rig workers, needed to drill and complete wells across the region. Since those workforces move around often to different drill sites, companies prefer to house them in hotels rather than longer-term residences such as houses or apartments.
Braxton Development, based in Bozeman, Mont., built Microtel Inns in the small North Dakota towns of Williston and Dickinson last year and opened a Hampton Inn in Williston last August. "When we first started, we were the second hotel in Williston to get built," Braxton principal Jon Braxton said. "But more competition came along quickly. It's as crazy as ever. Hotels still are running fairly full."
However, some hoteliers worry that the hotel-construction booms in markets like North Dakota amount to a bubble set to pop, especially if federal regulation cools the drilling industry or if gas and oil prices decline sharply. Lamont Cos., based in Aberdeen, S.D., recently built a Hampton Inn in Dickinson, N.D., and the builder also is planning a Candlewood Suites in the town.
Yet Jeff Lamont, president and chief executive, said he would sell the properties if the right offer surfaces. "I know of six or seven hotels going up in Dickinson," he said. "It has us a little nervous about what might happen with the occupancy once all of these hotels are built. To me, it seems like there might not be enough demand there for all of them."
Overall, two-thirds of new hotels under construction in the U.S. are either upscale or upper midscale, according to Lodging Econometrics. And many of those are limited-service properties, meaning they don't include restaurants or other amenities found in full-service hotels.
Developers and lenders tend to favor those types of hotels because they are more profitable than full-service hotels with restaurants. They also can be built on smaller sites and tend to hit their stride with occupancy and rate more quickly after they open.
The construction boom is made possible by the availability of construction loans, which dried up during the economic downturn but are now starting to flow again. Joe Hoesley, vice president of commercial real estate for U.S. Bancorp USB +0.53%in Minneapolis, said underwriting criteria remain fairly stringent for hotels.
Hotel owner and developer White Lodging Services Corp. has six hotels under construction in five states. Deano Yiankes, president and chief executive of White Lodging's investments and developments division, said that construction loans are "available at terms that are starting to get into the realm of doable again" for credit-worthy companies
http://professional.wsj.com/article/SB40000872396390444772804577621842373381510.html
US Hotel Development Pipeline Down 6.9% August 2012 (9/12/12)
The total active U.S. hotel development pipeline comprises 2,745 projects totaling 304,825 rooms, according to the August 2012 STR/McGraw Hill Construction Dodge Pipeline Report. This represents a 3.5-percent decrease in the number of rooms in the total active pipeline compared to August 2011. The total active pipeline data includes projects in the In Construction, Final Planning and Planning stages but does not include projects in the Pre-Planning stage.
“August posted an increase in the number of rooms in construction in all regions, with the East North Central and East South Central regions leading with 55.2 percent and 46.5 percent, respectively,” said Duane Vinson, VP of database content and integrity at STR. “In sheer numbers, the Middle Atlantic exceeded all regions with 15,879 rooms in construction and the South Atlantic led rooms in the total active pipeline with 68,833 rooms..”
“We’re seeing a gradual draw down in all areas with perhaps the exception of New England and the Middle Atlantic regions,” Vinson continued. “The total active pipeline is up 3.9 percent in New England due to continued heavy development in the New York market. Pre-planning rooms in both regions rose considerably with a 16.4 percent-increase in the Middle Atlantic to 16,644 rooms and a 34.3 percent-growth to 5,018 rooms in New England.”
Among the nine regions in the U.S., the West North Central region reported the largest increase in rooms in the total active pipeline, rising 13.8 percent with 15,744 rooms, followed by the East North Central region (+5.6 percent with 25,893 rooms) and the New England region (+3.9 percent with 9,331 rooms). The South Atlantic region posted the largest decrease, falling 12.5 percent with 68,833 rooms in the total active pipeline. The South Atlantic region ended the month with the most rooms in the total active pipeline (68,833 rooms).
Four regions reported increases of more than 20 percent in the number of rooms under construction: the East North Central (+55.2 percent with 6,974); the East South Central (+46.5 percent with 5,289); the West South Central (+32.4 percent with 10,344 rooms); and the New England region (+22.8 percent with 1,006 rooms). Overall, the Middle Atlantic region reported the largest number of rooms in the In Construction phase with 15,879 rooms.
http://www.hotelnewsresource.com/article66244US_Hotel_Development_Pipeline_Down______August_____.html
Smith Travel Research Projects Record a 2.1-percent Increase in Occupancy to 61.2 Percent for 2012 (9/12/12)
The U.S. hotel industry is expected to see modest gains for year-end 2012 and in 2013, according to the updated U.S. forecast released by STR during the 2012 Hotel Data Conference last week.
For 2012, the industry is expected to record a 2.1-percent increase in occupancy to 61.2 percent, an average-daily-rate gain of 4.4 percent to US$106.15 and a revenue-per-available-room increase of 6.5 percent to US$65.01.
Supply and demand are expected to end the year with increases of 0.5 percent and 2.6 percent, respectively.
“Record levels of demand for hotel rooms persist,” said Amanda Hite, president of STR. “However, it is clear to us that roomnight demand will stabilize with modest growth likely for the remainder of 2012 and into 2013. The developing story line is that industry-wide RevPARs will be driven by rate growth over the next two to three years. We anticipate room rates to reach 2008 levels, not factoring for inflation.”
In 2013, STR predicts occupancy to be virtually flat with a 0.3-percent increase to 61.4 percent, ADR to rise 4.6 percent to US$111.01 and RevPAR to grow 4.9 percent to US$68.17.
Supply and demand are forecast to end 2013 with increases of 0.9 percent and 1.2 percent, respectively.
http://www.hotelnewsresource.com/article66247Smith_Travel_Research_Projects_Record_a_____percent_Increase_in_Occupancy_to______Percent_for_____.html
Hotel Fundamentals and Sales Improve
Tucker, Michael
Hotel average daily rates continued upward in April, setting near-record growth margins over 2011 rates, reported hotel technology firm Pegasus Solutions, Dallas.
North American corporate hotel rates set a new year-over-year growth record, increasing 9.3 percent over last April, beating February's previous record increase. Overall rates including corporate, business travel and leisure travel increased 7.3 percent year-over-year.
"A common misstep many hotels made in 2001 and 2008 when bookings fell was to automatically abandon strategy and slash rates," said Mike Kistner, CEO of Pegasus Solutions. "April’s numbers show that corporate rates paid in April 2012 were higher than four of the five previous years, and just shy of three percentage points of those paid in 2008."
"Hotels are staying true to their product, not only maintaining rates, but also driving them back to where they need to be," Kistner added. "Combined with bookings growth, this rate growth has corporate revenue up by double digits over all five previous years."
With operating fundamentals strong, U.S. hotel transaction volume reached its second-highest volume over the past four years, with $5.1 billion in assets changing hands through May, reported Jones Lang LaSalle Hotels, Chicago.
"The volume of capital flowing to hotel real estate remains high as acquisitive investors enthusiastically seek opportunities to buy hotels," said Arthur Adler, Americas CEO of Jones Lang LaSalle Hotels. "Underpinning investor confidence is the continued strength in hotel operating fundamentals, which are solid across all metrics. On a national basis, hotel revenue per available room has maintained the strong growth rate posted in 2011."
The average price per key for single-asset transactions rose five percent compared to full-year 2011 levels to top $194,000, which Adler said "far exceeds the average price per key recorded over the past several years, and emphasizes the strength of hotel fundamentals and high level of investor interest."
The first five months of 2012 represent the second-highest start to a year since 2008, only exceeded by the first five months of 2011 when total transaction volume reached $6.4 billion, largely because real estate investment trusts dominated $100-million-plus prime urban asset purchases.
Unlike early 2011, private equity dominated REIT purchases this time around. "Private equity investors continue to make headlines and account for 52 percent of transaction volume, followed by real estate investment trusts, as the second most acquisitive group, representing 25 percent of purchases by volume," said Adler. But he added that REITs remain active bidders for a number of hotel transactions and he expects them to become increasingly active in the rest of the year.
http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=31637#full
Blackstone Lodges Several Hotel Moves (5/22/12)
By KRIS HUDSON And CRAIG KARMIN
Blackstone Group LP, one of the world's largest hotel investors, is playing both offense and defense these days as the lodging industry slowly recovers from the downturn.
On offense, the private-equity giant continues to load up on new properties. Blackstone on Tuesday agreed to buy the Motel 6 discount lodging chain from the French hotel company Accor SA in a deal valued at $1.9 billion. The transaction mirrored an acquisition by Blackstone earlier this month of a $606 million mortgage coming due on the 13-hotel Eagle Hospitality portfolio.
Meantime, Blackstone has been shoring up the balance sheets of major hotel purchases it made before the bust. In the latest example of such a defensive move, the firm restructured and pared down the debt on the La Quinta Corp. chain that it purchased in 2006 for $3.4 billion, according to people familiar with the matter.
Blackstone's deal engine is getting stoked by its success at fundraising, which is surpassing other private-equity firms. The firm has raised more than $10 billion for a real-estate fund that could reach $12 billion by year-end.
Blackstone has been using that cash to buy and restructure a wide range of property types including office, retail and industrial. But it clearly has a sweet spot for hotels these days, believing that at this point in the cycle lodgings are benefiting from rising room rates and little new supply.
Blackstone also owns Hilton Worldwide Inc. and a large stake in Extended Stay Inc. Once the Motel 6 deal closes, scheduled for October, the firm's properties will range in price from the Waldorf Astoria in Manhattan, where single rooms currently start at $419, to the Motel 6 in Avoca, Iowa, near exit 40 of Interstate-80, which was charging $49.99.
Motel 6 was started 50 years ago by two building contractors in Santa Barbara, Calif., taking its name from its original nightly rate: $6. The chain counts more than 1,000 hotels, including 604 of its own properties and 483 franchise assets.
Blackstone plans to upgrade the Motel 6 properties it is acquiring and expand the franchise base, according to a Blackstone executive. The acquisition price breaks down to about $25,000 per room, which analysts say is below replacement cost.
Besides buying hotels directly, Blackstone has been adding to its portfolio by taking advantage of the distress of others. In the Eagle deal, Blackstone this month agreed to pay roughly $465 million for a $606 million mortgage coming due in September on the 13-hotel portfolio, according to people familiar with the matter. The seller was the Federal Reserve-controlled Maiden Lane fund, which inherited several loans from Bear Stearns Co. when the Fed brokered the failed investment bank's sale to J.P. Morgan Chase & Co. in 2008.
The Eagle portfolio is owned by real-estate fund manager AREA Property Partners, which bought it in 2007. However, the portfolio's mortgage comes due in September, and Blackstone's purchase amounts to a bet that AREA will fail to refinance, pay or extend the loan, allowing Blackstone to foreclose.
"As a fiduciary, we are ensuring that the company explores all options to protect the interests of all stakeholders, including a restructuring of the debt before the maturity this fall," said an AREA representative. "The company is currently meeting its debt service obligations and expects to do so through maturity."
Blackstone's cash also has come in handy when restructuring its post-downturn deals. To restructure the debt on the 822-hotel La Quinta chain, the firm paid down $150 million in debt and went into the market and bought $265 million in junior debt and retired it.
Finally, Blackstone extended the $2.65 billion in debt outstanding to July 2014 by agreeing to pay an interest rate 3.5 percentage points higher than under the previous terms. That debt, which was mostly carved up into commercial mortgage-backed securities and sold to investors, had been due to expire in July 2012.
The La Quinta restructuring is similar to what Blackstone did with its only larger hotel holding, Hilton Worldwide, in 2010. Blackstone spent roughly $800 million to buy $2 billion of Hilton's debt at a discount and retire it. It then converted other debt to preferred equity, cutting Hilton's debt load to $16 billion from $20 billion and pushing its due date to 2015.
Blackstone bought time with the Hilton restructuring to wait for better conditions to take the chain public and cash out of its investment. In recent comments, Blackstone executives have said that volatility in Europe, the impending U.S. presidential election and the fitful economic recovery in the U.S. make 2012 too uncertain for many public offerings or asset sales.
"You want to sell your assets when markets are strong and you get good prices," Blackstone President Tony James said during an April 19 conference call to discuss the firm's first quarter results. "So, we're building value in our investments and in our real estate. We're supposed to be smart about when we harvest that value. And it hasn't looked to us like the greatest of times yet."
Write to Kris Hudson at kris.hudson@wsj.com
http://professional.wsj.com/article/SB10001424052702303610504577420371037163302.html?mod=residential_real_estate&mg=reno64-wsj
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W2007 Grace Acquisition I, Inc.
6011 Connection Drive
Irving, TX 75039
Grace Acquisition I, Inc. is the result of the October 25, 2007 acquisition of Equity Inns, Inc. The company owned 111 hotels at closing.
The aggregate purchase price paid for all of the equity securities was approximately $2.2 billion, including assumed debt, which purchase price was funded by the equity financing from Whitehall Street Global Real Estate Limited Partnership 2007. Goldman Sachs provided financing in the aggregate principal amount of $1.8 billion.
Each share of common stock was converted into the right to receive $23.00, without interest, and (ii) each share of 8.75% Series B Cumulative Preferred Stock and 9.00% Series C Cumulative Preferred Stock of the Company outstanding immediately prior to the effective time of the Merger was converted into the right to receive one share of 8.75% Series B Cumulative Preferred Stock (WGCBP) and 9.00% Series C Cumulative Preferred Stock (WGCCP), respectively.
There are 3.45 million shares of 8.75% Series B Cumulative Preferred Stock and 2.4 million shares of 9.00% Series C Cumulative Preferred Stock outstanding.
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