got a question about reits.

[mopinko]

so, i have a reit that gets farmland through to organic cert, and sells/leases to farmers.
it’s done well, but i sorta have my assets in a sling atm. you can only cash your shares once a year, and i just missed it.
is this normal for reits? anyone know a way i could leverage this?
i could rly use at least half the money. i get a few hundred a year on it, and i love it.
but…

[A HERETIC I AM]

1. I've only heard of one REIT that restricted trading of shares.

I had a client that had shares of the Empire State Building REIT that was basically private placement. In order to get shares you had to know somebody or inherit them, etc.

Is this the case with yours?

The only way I could give an educated opinion is to read the prospectus or visit the website and read about it there.

Do you have a ticker for it? Is it a private placement type?
Without more info I just can't offer an answer at all.

If you don't want to share that info publicly, you could message me.

[mopinko]

2. pretty much yeah, a small fund that i knew someone.

iroquois valley. used to get chicken feed from a guy who was a founder.
he was a big money guy who was fat and falling apart, started eating organic, and got religion.

https://iroquoisvalley.com/invest/reit/

[A HERETIC I AM]

3. I'm working 12 hour days right now, but I did get a quick look at it... (See below)

Last edited Fri Dec 9, 2022, 10:11 AM - Edit history (1)

And it appears the only way you would be able to liquidate any shares outside of the specified trading window is if you found another shareholder willing to buy them from you and even then it might not be allowed. It would appear the REIT is it’s own record keeper and they might just refuse to record the transaction.

I’ll have to read more to give a better answer, but suffice to say, the document I read states very clearly that these shares are not traded on any exchange so the only buyer and seller available to you is the REIT itself.

As far as “leveraging” them, it’s possible your bank or another financial institution would be willing to loan you money using your holdings as collateral, but that is something you would have to investigate.

See below, as I’ve added more detail. In the meantime, I hope I’ve been a little help, albeit perhaps not what you were hoping to hear.

Cheers

[A HERETIC I AM]

7. I have to offer a clarification to the above;

I said I had a client (back when I was a broker for AG Edwards in 2006 & 2007) that told me they had shares in a REIT that was made up solely of the Empire State Building. I just did a Google search on that terminology and came up with a publicly traded trust that covers this same Real Estate - https://finance.yahoo.com/quote/ESRT?p=ESRT&.tsrc=fin-srchs

So I don't know what the guy was referring to, frankly. I remember him talking to me about it, but I never did any research until just now!

I'm sure there are scores of private, Regulation "A" REIT's out there that are equally obscure as the one in the OP, but the Empire State Building is not one of them!

I just want to correct my inaccuracy.

[A HERETIC I AM]

4. OK...had a chance to read the Offering Circular.

And I don't mean to tell you anything you already know, but it looks like you're stuck with these shares until the next redemption period rolls around.

It’s done well, but i sorta have my assets in a sling atm. you can only cash your shares once a year, and i just missed it.

And that is it for a year, unfortunately. They could at their discretion set a redemption period every 18 months, but they do say they will try and do one every 12 months.

Is this normal for reits?

It isn't for REITS traded on an exchange, that's for sure, but what you have here is a special animal using "Regulation A, Tier 2" of the SEC rules which exempts this security from registration, basically allowing it to operate in a unique way compared to common stock of a publicly traded company, or any other publicly traded REIT.

Anyone know a way i could leverage this?

As I said in my previous answer, the only way you could possibly do so is by approaching your bank or another financial institution and offer your shares as collateral on a loan. I wouldn't give too much hope to this because the shares are illiquid. I exclude using a Margin loan if these are held in a brokerage account because I would bet a days pay any Margin agreement would exclude the use of a security like this for those purposes. After all, what happens if you get a Margin Call and can't sell shares to cover? (On edit to say, I could absolutely be wrong on that last point, so it might be worth asking your brokerage if these shares are held there)

I could rly use at least half the money. I get a few hundred a year on it, and I love it.
but…

And that is a problem, I can understand. Unfortunately, they told you going in what you were investing in, so unfortunately, as I said, you are stuck with the shares till next time a redemption window comes around.

Read this page starting under the header "POLICIES WITH REGARDS TO CERTAIN ACTIVITIES" and then "STOCK REDEMPTION PROGRAM".
https://iroquoisvalley.com/wp-content/uploads/2022/11/IroquoisValleyREITOfferingCircular2022_November.pdf#page=87

Important part;

No Market: We are structured as a perpetual-life entity and have no current intention to list our shares of common stock on an exchange or other trading market. No established regular trading market for our shares of common stock currently exists. Our Stock Redemption Program will be amended or terminated if our shares of common stock are listed on a national securities exchange or included for quotation in a national securities market, or in the event a secondary market for shares of our common stock develops.

They also clearly want you to hold the shares for a minimum of 5 years, so if you are able to redeem them early you make take a haircut.

Here's the pertinent part to your primary question;

Our shares are illiquid. Our Stock Redemption Program requires a minimum 5-year holding period for eligibility.
There is no public market for our shares, nor a specific deadline by which one will be created, if ever. There is
no requirement that our operating company liquidate our portfolio by a specific date, and in fact it is generally
our intent to work with our farmers to hold and steward land for organic farming on a long-term basis. Until
shares of our common stock are listed, if ever, you may not be able to sell any shares of our common stock purchased hereunder. If you are able to sell your shares of our common stock, you may have to sell them at a substantial loss.

(Emphasis mine)

From this document;

https://iroquoisvalley.com/wp-content/uploads/2022/11/IroquoisValleyREITOfferingCircular2022_November.pdf

There's a lot in the above links to read, and it's important to do so, in my opinion. Understanding any security you have invested in is of paramount importance.

So basically.....you got em' and you got to hold em'! Hopefully they will continue to pay a handsome dividend/distribution till you are able to unload them. On the other hand, you may just want to keep the shares if they truly do seem worth it.

I hope I was of some help.

May all your trades be net gains.

[mopinko]

5. thx. it wasnt a reit when i bought it

i dont remember what it was, exactly. shares. and i thought of it as a long term thing, not rainy day money. so i wasnt rly thinking i’d cash it any time soon. as they got bigger, they turned it into a reit. iirc, there were some options at the time to not have shares converted. so it’s not like i was choosing btn 1 reit and another.
i should prolly read the emails more closely. i wonder if they plan to convert it.

it has appreciated pretty well. if i could shift it to my investment account, they might not lend against it. but it looks good on the bottom line. lol.

not the 1st time i’ve been a day late and a dollar short, and wont be the last.
ty. i’ll be out of this hole soon, 1 way or another.
if things arent hunky dory next nov, i know i have a cushion to grab.
appreciate ur time.

[A HERETIC I AM]

6. According to their "About/Our Story" page, they were an LLC;

Iroquois Valley operates as a real estate investment trust (REIT). The company structure was approved through shareholder voting and took effect on December 31, 2016. Previously, Iroquois Valley operated as an LLC. The Company believes the REIT structure optimizes the long-term growth potential and plans of the business.

So yeah, it wasn't operating as a Real Estate Investment Trust till the end of 2016.

Interesting business model, if nothing else.

I'm happy if I was of some help.

[mopinko]

8. it is. funny story

so like i said, 1 of the founders used to sell me chicken feed. had a co called- backyard chicken run. he’d deliver and just drop off on his own. he wrote a book called ‘the local yolk’ about the biz issues in organic farming. he says my farm name- moah’s ark- is his fave of all the cleverly named small farms he visited.
he ended up moving to colo cuz he got harassed so bad about keeping chickens in a town that touted it’s ‘farming roots’. le sigh.

so, they have shareholder mtgs that i have attended a couple times. 1 was at the farm of 1 of the founders in kankakee, il. about 50 mi out of chi.
went to that 1 and when i walked up to the farmer and introduced myself, he introduced me to the person he was talking to, who turned out to be my 2nd cousin that i hadnt seen in decades. hilarious. stayed connected.
yeah, just a little band of weirdos that started a thing. right place, right time, too, i think.

it’s done well. in 7 yrs, my share has increased from $30k to $45k.
i’m not rly mad i cant cash it. i’d like to keep it. and i suspect in the future, if they grow enough, they will list it. and if we put the money into fixing ag, it should do rly well. they r quite conscious of their cause, and their methods. serious focus on impact.
and well down a road a lot of ppl r just starting down.

[A HERETIC I AM]

9. Very cool!

That's a very interesting story!

Well, if nothing else, you are in on the ground floor of a fascinating investment vehicle.

I hope you get past this bumpy financial bit soon.

Cheers!

[mopinko]

10. i will.

i have a sf rental that i’m putting on the market soon. own free and clear, will make a tidy profit on my rehab. plus 2 1/2 yrs of nice rent.