Magazine article American Banker

Ga. Firm's Real Estate Fund Sales Soar since Sept

Magazine article American Banker

Ga. Firm's Real Estate Fund Sales Soar since Sept

Article excerpt

As returns on fixed-income products stumble, some banks are turning to a small Atlanta real estate fund company for an investment that offers both safety and stable returns.

Wells Real Estate Funds has taken in $3 million a day of assets during the past three months, compared with $2 million daily before Sept. 11, said Leo F. Wells 3d, the fund company's president and founder. He said the real estate funds his company sells are popular with banks because they offer investors a rare combination -- dividends with no volatility.

"Every month has been a record month for us lately," said Mr. Wells; "we have generated 50% to 70% growth since Sept. 11. Investors can feel the uncertainty" of the market. "They want hard assets."

Mr. Wells said interest in real estate funds has peaked in the past two years as money market funds, bonds, and other fixed-income products have declined. His company's assets under management have doubled, to $1 billion, since December 1999, he said.

The fund company has relationships with five banks, and Mr. Wells said it is in active talks with 16 others. He said he expects to add at least four by June 30. He predicted that he will add $500 million of assets by the end of next year.

Wells Real Estate Funds buys large commercial properties and leases them to corporations nationwide. Like a real estate investment trust, it lets investors, for a minimum of $1,000, own a part of a series of large commercial real estate properties. But since the Wells funds are not traded publicly, the sale price does not fluctuate.

"People are realizing that they need this product," Mr. Wells said. "Real estate is a great product. Right now, people are far too overweighted in growth. They need at least 10% of their portfolio to be invested in real estate funds in order to be truly diversified. …

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