UDF V Offering Terminated
United Development Funding Income Fund V, a publicly registered non-traded real estate investment trust co-sponsored by UDF Holdings and American Realty Capital, is closing its offering to new investments and discontinuing its distribution reinvestment plan and share repurchase program.
The company sent a letter informing shareholders of the board’s decision not to seek a new dealer manager following Realty Capital Securities’ exit from the wholesale distribution business in December 2015.
The letter, which was sent on March 4th, indicated that the company’s DRIP campaign will terminate 10 days from the date of the letter, while the share repurchase program will terminate 30 days after. The letter also stated that the company has no intention of repurchasing any shares prior to the program’s official termination.
UDF V has originated eight loans for residential development projects, with 69 percent of the loans’ principal secured by properties in the Dallas, Texas area and 31 percent secured by properties in the Houston, Texas area.
The company indicated that it intends to continue operating UDF V in its normal course to complete the eight projects in its portfolio, stating, “As we fund our outstanding commitments and the developments are brought to completion and finished lots and land are sold to builders, UDF V intends to repay any outstanding debt and return capital to our shareholders.”
The company declared a daily distribution of $0.0040274 per share for shareholders of record as of the close of business of each day in February 2016, payable at the end of March.
The distributions will be paid in cash as a result of the termination of its distribution reinvestment plan. Going forward, distributions will be determined by the board of trustees on a quarterly basis and may include a return of invested capital.
As reported by The DI Wire on Thursday, Eustice Mita voluntarily resigned as a member of the board of trustees. The board now has three members.
Last month, the FBI raided the Grapevine, Texas office of United Development Funding headquarters and seized multiple boxes. UDF is the sponsor of several non-traded real estate investment trusts, as well as a traded REIT, United Development Funding IV (NASDAQ: UDF).
The raid followed public accusations by Kyle Bass, hedge fund manager and founder of Hayman Capital Management, who launched the website UDFexposed.com and accused the company’s public REIT, UDF IV, of operating a “Ponzi-like real estate scheme,” by using new investor money to pay existing investors.
UDF IV vehemently denied the rumors, claiming the website contains “multiple false and misleading statements about our company and management team.”
United Development Funding Income Fund V is a non-traded REIT that provides financing for the acquisition and development of single family residential lots. According to the January Stanger Market Pulse, the company has raised $57.6 million since it went effective in July 2014.
