Newly formed investment group to sell 2.5 million shares in IPO
J&P Realty Trust, a newly formed investment trust designed to acquire residential, multifamily and commercial properties, is selling 2.5 million shares of common stock for $3 per share in a public offering. J&P intends to become a real estate investment trust, or REIT, for tax purposes, according to the company's IPO filing with the Securities and Exchange Commission. Monies raised from the stock offering will be used to acquire residential and commercial properties. The trust states that the economic recession and corresponding credit crisis make multifamily, and single family properties attractive for investments. In its filing, J&P declares that the residential and commercial property sectors are experiencing significant stress from declining operating fundamentals, high levels of unemployment, and difficult credit conditions. "In addition, many property owners took advantage of abundant capital availability and placed excessive leverage on properties. The current reduction in credit availability and weak operating conditions make refinancing near term debt maturities more difficult," it said. J&P is looking to pay all-cash for these distressed properties. "We believe that with our companies ability to have ready access to equity and debt capital, with no legacy issues, we will have a competitive advantage in acquiring high quality real estate assets at attractive current returns and at a discount relative to both replacement cost and valuations from recent years," the SEC filing states. To qualify as a REIT, J&P said stock ownership by any individual is limited to 9.8%. "We designed our ownership limits solely to protect our status as a REIT and not for the purpose of serving as an anti-takeover device," J&P said in SEC documents. The firm advised potential investors that no specific properties have been identified as potential investment opportunities. However, when J&P Realty does begin its acquisition of properties, investors in the firm will not be able to evaluate the economic merits of any investments made, J&P asserted in its filing. The new REIT's interest in acquiring residential and commercial properties arrives at a time when the nation is dealing with a shadow inventory of distressed residential assets. America's shadow inventory currently stands at 1.7 million residential units, according to CoreLogic (CLGX). Write to: Kerri Panchuk.