IRVINE, CA-A new nontraded REIT called Shopoff Properties Trust that specializes in acquiring tracts of land from lenders and developers has launched a $200 million offering, has closed on its first $16.7 million of stock sales and is already in escrow on three properties. The REIT’s top exec, Bill Shopoff, tells that it is buying primarily from lenders—in some cases acquiring foreclosed development sites and in other cases buying the loan from the lender and then conducting the foreclosure process itself.

Although Shopoff Properties Trust has only recently entered escrow on its first deals, the REIT filed its first preliminary prospectus with the SEC in November 2006 in anticipation that land prices would fall and properties that ran into trouble would be available at significantly lower prices. Shopoff—who serves as the REIT’s chairman, president and CEO—says that he and his team “thought there would be a retrenchment,” but prices have fallen even farther than they expected.

The business plan for Shopoff Properties Trust involves acquiring the land and then taking whatever steps are necessary, such as completing entitlements that the previous owner had started on, to re-sell the the property to home builders or developers. In a few cases the REIT might be able to just buy a piece of land, sit on it for a while and then sell at a profit, but Shopoff says that will not be the case with most properties it buys. “Most of these deals have some other problem than just the financial structuring,” the Shopoff CEO explains. “There is often still some entitlement work that needs to be done, or some re-entitlement to make the asset viable. We might buy a subdivision and have to protect the approvals that the previous owner got.”

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