Large, Private REIT Under SEC Probe


One of the nation’s largest nontraded real estate investment trusts, Inland American Real Estate Trust Inc., is under investigation by the Securities and Exchange Commission for potential violations of securities laws regarding its fees and administration.

According to a report in Investment News, Inland American controls $11.2 billion of real estate assets. It made the SEC investigation known earlier in the week in a quarterly filing.

The SEC’s investigation centers on common criticisms around the nontraded-REIT industry: the details of its fees.

Inland American “has learned that the SEC is conducting a nonpublic, formal fact-finding investigation to determine whether there have been violations of certain provisions of the federal securities laws,” the company said.

The potential violations are “regarding the business manager fees, property management fees, transactions with affiliates, timing and amount of distributions paid to investors, determination of property impairments, and any decision regarding whether the company might become a self-administered REIT.”

Inland American noted that it has not been accused of any wrongdoing at this point and is cooperating with the SEC.

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