Further Reckoning of UBS Willow Fund's CDS Losses
(Feb 2014)
In previous blog posts we explained how the UBS Willow Fund completed its spectacular multi-year collapse in 2012 largely as a result of its leveraged portfolio of credit default swap (CDS) contracts. See Credit Default Swaps on Steroids: UBS's Willow Fund and Willow Fund's Hedging, Investing and Speculating in Distressed Debt With Credit Default Swaps. Through these CDS contracts, the Willow Fund made a large, highly-leveraged short bet on credit risk contrary to its repeated SEC...
The Inland Group's Non-Traded REITs Destroyed $11.9 Billion of Investor Wealth
(Feb 2014)
Last week we wrote about how investors in a non-traded REIT, Inland Diversified Real Estate Trust, had lost $200 million compared to traded REITs even though it announced a merger with a traded REIT, covered in our blog post"More Non-Traded REIT Carnage: Inland Diversified's Investors Have Lost 40%, Not Gained 31%".
Continuing our blog posts and working papers on non-traded REITs, today we report on how investors fared in five non-traded REITs sponsored by affiliates of The Inland Real...
Another Example of Non-Traded REITs' Wealth Destruction: Columbia Property Trust (Wells REIT II) Cost Investors $4.4 Billion
(Jan 2014)
Non-traded REITs are illiquid investments, not listed on public exchanges and with little to no secondary market trading. Their offering documents typically claim that after some period of time, perhaps 5-10 years, the REIT intends to list on an exchange, merge with another company, or in some other way allow investors to sell their shares but for many non-traded REITs, this "liquidity event" never occurs.
However, even if a non-traded REIT lists on a major exchange, that does not mean that...
Diversification and UBS Puerto Rico Bond Fund Losses
(Dec 2013)
The 19 closed-end bond funds managed by UBS Puerto Rico listed in Table 1 lost $1.66 billion in the first 9 months of 2013. These funds were sold almost exclusively to citizens of Puerto Rico and approximately 70% of the portfolios of these funds were invested in Puerto Rican securities. The percentage losses over the past year range from 38% to 48% for the worst-performing UBS PR funds. These losses are substantially greater than Puerto Rican municipal bonds generally. The Standard and...
Diversificación y Pérdidas de los Fondos de Bonos de UBS Puerto Rico
(Dec 2013)
Los 19 fondos cerrados de bonos administrados por UBS Puerto Rico presentados en la Tabla 1 registraron pérdidas de $1.66 billones de dólares durante los primeros 9 meses del año 2013. Estos fondos fueron vendidos casi exclusivamente a ciudadanos de Puerto Rico y aproximadamente el 70% de las carteras de estos fondos se invirtieron en títulos Puertorriqueños. En el último año, las pérdidas de los fondos de UBS PR con peor desempeño fluctuaron entre un 38% y 48%. En general, estas pérdidas...
The Consequences and Implications of TIC Investments
(Nov 2013)
The research we have outlined all this week strongly suggests that TIC interests are exceptionally poor investments. We have focused our posts on what a thorough due diligence on the TICs should have revealed at the time of issuance. But you may be wondering, what happened to these TICs? What sort of returns did investors receive?
To our knowledge, there is no retrospective study of TIC returns. But in our experience, the vast majority of TIC properties suffered significant impairments during...
Welcome to Tenancies-in-Common (TIC) Week on the SLCG Blog
(Oct 2013)
Today, SLCG posted a new research paper, Large Sample Valuations of Tenancies in Common . In it, we value 194 TICs, totaling $2.2 billion in equity and representing approximately 17% of the TIC industry from 2004 to 2009. Our paper complements our earlier research on TICs ("What is a TIC Worth?" and "Private Placement Real Estate Valuation"), and is the most extensive empirical study of TICs to date. This week we will be summarizing the results of our research in a series of blog posts. But...
