CBRE Realty Trust Offers $2B in Shares

LOS ANGELES-CB Richard Ellis Realty Trust, a REIT sponsored by CB Richard Ellis Investors, has begun sales of $2 billion in shares in the REIT's previously announced public offering, which will raise funds for investments in a wide range of US and overseas commercial property types. The REIT is organized under a relatively unusual structure in that its shares will not be listed on any exchange but will be marketed through CNL Securities Corp., the dealer manager for the offering.

Jack Cuneo, president and CEO of CBRE Realty Trust, explains to GlobeSt.com that the REIT's structure enables individual investors who are looking for diversification and additional income to "emulate what institutions and pension funds have historically done" by investing in direct real estate investments with professional management. The REIT creates an acquisition vehicle for CB Richard Ellis Investors and offers the added benefit that it "is a registered offering that makes it easier for us to market" the investment, Cuneo points out.

"What we're doing is taking the resources of CBRE, our parent, and combining them with the resources of our immediate parent, CBRE Investors, to create an investment in a form that is palatable for the individual investor," Cuneo says. One of the reasons for offering such an investment, he points out, is that "More people are taking control over their own finances and want the ability to diversify their portfolios through their own decisions."

The REIT is offering 90% of the $2 billion in shares at a price of $10 per share, with the remaining 10% to be offered at a price formula based on its dividend reinvestment plan. The minimum required investment is $5,000.

CBRE Realty Trust began as a private REIT more than two years ago with a placement of $55.5 million through Wells Fargo, and this new structure is "a continuation of that same REIT on a registered basis," Cuneo explains. "It's an SEC-registered public company but is not listed on any exchange," he says.

Unlike initial public stock offerings that are listed on exchanges and typically sell most of their shares within a few days, offerings like CBRE Realty Trust generally have a prolonged marketing period. In this case, the REIT's filings with the SEC say that the marketing period will last for approximately two years.

CBRE Realty Trust plans to invest the proceeds of its REIT offering in office, retail, industrial and multifamily properties, and it may invest up to 30% of its assets outside of the US, according to its SEC filings. If it does invest overseas, "investments outside of the US will be focused in areas in which CBRE Investors has existing operations or previous investment experience, which today consist of Western Europe and Japan," the filing states.

Cuneo tells GlobeSt.com that the REIT's guidelines provide that its board of trustees will meet in 2011 to review options on whether to list the shares on a stock exchange or to pursue some other strategy. Besides listing on an exchange, other options the trust might consider would include liquidating its assets or selling its holdings to another company.