CHICAGO--(BUSINESS WIRE)--The Illinois securities regulator has subpoenaed Inland American Real Estate Trust’s records related to Inland Bank as part of an inquiry related to the REIT, according to UNITE HERE. The inquiry pertains to Inland American’s transactions with Inland Bank, an Illinois-based bank that is majority owned by top Inland Group principals. Inland Bank was subject to a Consent Order by regulators in late 2012, prompted in part because of an unusual loss sharing agreement with undisclosed affiliates under common control, notes UNITE HERE.
The question of whether Inland American was used to prop up the losses of Inland Bank has been posed by an investor and UNITE HERE. “My investment is in the toilet. I believe that fees to Inland insiders contributed to the low share value. I wrote Inland American management twice asking a straight question about the purpose of the account at Inland Bank. I did not get a straight answer back,” said Ken Mills, 81, of Marlton, NJ.
Inland American’s latest estimated share value has declined over 30% from what most investors purchased in at, notes UNITE HERE. Based on the union’s analysis as of Q2 2014, excluding transactions with the bank, Inland American has charged stockholders nearly $1.4 billion in fees benefiting Inland insiders. In its letter to the SEC, UNITE HERE raised concerns over disclosure of Inland Bank’s ownership and its business ties to Inland American management.
The Illinois Securities Department has joined the SEC and the State of California in questioning Inland American, notes UNITE HERE. The new regulatory scrutiny comes soon after Inland American announced its intention to spin off 46 hotels into a public REIT named Xenia Hotels & Resorts (proposed NYSE ticker: XHR). In addition to Xenia, affiliates of the Inland Group are currently fundraising Inland Retail Property Fund, Inland Residential Properties Trust, and Inland Real Estate Income Trust, according to UNITE HERE.
For further information, go to http://www.inlandinvestoralert.org/by-state/.