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Of the 4 nontraded REITs in the Blue Vault Liquidating LifeStage, American Finance Trust, InvenTrust Properties, KBS Legacy Partners Apartment Trust, and Lightstone Value Plus Real Estate Investment Trust V (formerly Behringer Harvard Opportunity REIT II), which REIT has the strongest interest coverage ratio?

May 24, 2018

Of the 4 nontraded REITs in the Blue Vault Liquidating LifeStage, American Finance Trust, InvenTrust Properties, KBS Legacy Partners Apartment Trust, and Lightstone Value Plus Real Estate Investment Trust V, which REIT has the strongest interest coverage ratio??

Answer: Of the 4 Liquidating LifeStage REITs, Lightstone Value Plus Real Estate Investment Trust V has the healthiest interest coverage ratio at 7.7X.  However, each of the other 3 Liquidating LifeStage REITs also has what is considered to be a healthy interest coverage ratio; American Finance Trust at 3.4X, Inventrust Properties at 7.0X, and KBS Legacy Partners Apartment Trust at 2.0X.  According to industry analysts, a 2.0X interest coverage ratio, meaning operating income is at least twice interest expense, is generally considered to be in the healthy category.      
 
Furthermore, while American Finance Trust is paying a distribution yield of 5.20%, its MFFO payout ratio of 131% means it is not covering those distributions completely.

 

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I have been using Blue Vault Partners for the past five years.  I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs.  The reports help me analyze which sponsors are doing a responsible job of managing their offerings.  This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.

Gil Armour, CFP SagePoint Financial, Inc. February 3, 2016