Cal-Bay International to Form REIT

SAN DIEGO-Public company Cal-Bay International Inc., which has a software division, has made plans for the formation of an equity REIT, according to company officials. President and CEO Roger Pawson tells Globest.com the company has already begun processing paperwork for a REIT and expects the procedure to take anywhere from six months to a year.”Our intention is to eventually get up to $100 Million in acquisitions over the next two years and go from there,” says Pawson. The company is already underway with that mission as it plans to close soon on three deals and has another in the works. While specific details were limited on the deals, senior vice president Andrew Mercer briefly outlined the acquisitions.The first deal is a value-added multifamily play in Los Angeles valued at nearly $14 million. The other two deals are in Utah and Nevada and described as resort/residential projects valued at nearly $8 million. Mercer says that one of the deals will include the razing of existing apartments and then converting the site to condos. The fourth project, which is in the early stages, is a Malibu beach front residential property that could fetch as much as $8 million.While the early buys are heavy on residential property, Mercer adds that Cal-Bay is looking at all product types in it acquisitions. The buys will take place through a combination of “stock and cash” that won’t dilute the company’s preferred, restricted stock.Cal-Bay will join a growing number of companies – 152 to be exact – that are considered public equity U.S. REITs. Another 34 companies are public mortgage U.S. REITs, according to a report released by the National Association of Real Estate Investment Trusts.Pawson doesn’t believe the field is too crowded and points to 2004 REIT numbers compared to investment alternatives. “The average REIT share price was up 29.3% last year,” says Pawson. He adds that the “average mutual fund gained 8.4%, and the S&P 500 stock index rose 11.5%.” He also likes the higher dividends REITs have yielded. According to the NAREIT report, the average REIT had a 5.34% dividend yield vs. 1.8% for the S&P 500.