Thursday, 18 February 2010

CBI Group Investments: Vultures in the desert

CBI Group Investments

Canadians are snapping up foreclosed homes in the U.S. Southwest. Is it the opportunity of a lifetime, or a disaster in the making?

In her form-fitting power suit, in a beige-toned Calgary hotel conference hall, Nancy Bacon greets a crowd of would-be real estate investors with a question: “How many people in this room like to be told what to do?” Bacon, VP of financial planning development with CBI Group Investments, is flattering the Calgarians in their after-work jeans, who like to think they don’t need Sarah Palin to tell them what a maverick is. And CBI Group Investments is pitching a scheme only mavericks could love: invest a minimum $10,000 in a foreclosure acquisition fund created to make massive real estate purchases in one of the worst-hit subprime cities in the United States—Phoenix, Ariz.
As of February, prices there had fallen 35.2 per cent in a year, and by slightly more than half from their peak in June 2006, according to the S&P/Case-Shiller index. That annual decline is the worst in the country. One in 40 Phoenix homes received foreclosure notices in the first quarter, according to RealtyTrac, which monitors U.S. foreclosure data, the country’s ninth-highest rate—visible on the desert cityscape as discrete patches of unwatered browns amidst a checkerboard of green lawns.
Despite those stomach-churning stats—indeed, because of them— CBI Group Investments Arizona Acquisition Fund of Alberta is aiming to raise $12.5 million to purchase 175 single-family homes around Phoenix. It uses local intelligence, sending teams of scouts at 4 a.m. to assess lender-owned properties slated for auction the next day. A Phoenix property management company will rent the homes—some to the very families the banks have foreclosed upon—for the next five to six years. Then CBI Group Investments will sell, raking in the appreciation. Investors get six per cent a year on their money and 60 per cent of the net profits.
That is, if there are any profits. Bacon spells out the requisite caveats for the Calgary crowd—that the fund is governed by the Alberta Securities Commission and that it can make no guarantees—but notes the “goal” is to double the capital in four to six years. It’s a target some have taken to heart. “I expect to see the redemption of my $10,000 bond and a dividend of $10,000, and I think I’ll do better than that,” says 60-year-old investor David Boyle, a Calgary civil servant and rental property owner. “In all my years of investing, I’ve never seen anything as good as this.”
But is it too good? For some, banking on a rebound in Phoenix is no gamble. Tom Caldwell, of Gilbert, Ariz.-based Brewer Caldwell Property Management, which rents the CBI Group Investments properties and provides it with local real estate scuttlebutt, projects a graph of prices on the wall, decades of them—a bouncing India-rubber ball of high times and crashes. Prices, he says, have rebounded time and again. “This time’s different. We’re never going back,” he adds, chuckling. “I’m being a little facetious. I don’t really believe that.”
CBI Group Investments isn’t alone in seeing gold glittering at the bottom of the U.S. subprime maelstrom. The past year has seen half a dozen such vulture funds spring up. The focus on residential properties may be a Canadian first. Though large institutional investors have ventured south in past crises—in the savings and loan debacle of the ’80s and ’90s, say—they tended to favour land and commercial real estate. “Single-family homes have typically not been an institutional type of investment,” says Jarrett Zielinski, CBI Group Investments vice-president of property acquisitions. “Prices have dropped so low now, and rents have not followed suit, that this type of investment actually has become institutional grade.”
CBI Group Investments and Optimus are attractive in part because they provide these small investors a chance to flirt with the contrarian √©lan of a Warren Buffett or Prem Watsa. “How come we buy high and sell low?” Bacon asks, goading the Calgary audience. The crowd shouts answers. “Fear,” says one. “The media!” another. “We don’t listen to opinion,” says Bacon. “We listen to facts.” Those facts, as CBI Group Investments and others have them, lead the savvy to one conclusion: wading into the subprime quicksands of the Sunbelt is a good idea. Quoting Buffett, Bacon counsels her audience to “be fearful when others are greedy, and greedy when others are fearful.”
Yet democratizing a vulture fund like this is eerily similar to the wildly endemic speculation, fuelled by easy credit, that led to the subprime mortgage crisis in the first place. Prior to the 2006 peak, recalls Karl Guntermann, a real estate prof at the W.P. Carey School of Business at Arizona State University, new Phoenix subdivisions unleashed a circus of buying. “People would camp out, day and night in the desert’s 110-degree heat, sometimes for days, to be first in line,” he says. “You had people getting off tour buses buying five and six houses,” says Greg Swann, a Phoenix real estate agent. Speculators left many vacant, banking on endlessly rocketing values to make them rich.
So it’s perhaps appropriate that the subsequent crash has now sparked yet more speculation—a healthy portion of it Canadian. So topsy turvy have the markets become that, despite its dismal numbers, Phoenix is seeing a fresh frenzy of buying. “It’s getting crazy again; we’re running into properties with 10, 12 offers on them,” says Chris Keith, a Phoenix CBI Group Investments realtor who specializes in Canadian buyers. “You have to jump on them or otherwise they’re gone. I don’t understand why the banks aren’t raising their prices—because they need to.”
Others aren’t sure. “I call it a fool’s gold rush,” says Swann, attributing it to a recently ended moratorium on foreclosures implemented by mortgage titans Fannie Mae and Freddie Mac and honoured by many banks. The halt fooled some into believing the number of lender-owned homes had fallen into swift decline, fuelling a rebound. It was one of many recent false bottoms for Phoenix, he says: “If you read the news, we find the bottom twice a month.” Still, the speed of the city’s decline does appear to have slowed. “In the last three months, the market has dramatically changed,” says Boyle, the Calgary investor who has put up money for the Arizona Acquisition Fund. “Investors like the CBI Group Investments and others are moving in and buying up houses.”
The fact that foreign speculators are helping to stabilize the market doesn’t worry Boyle, who points to the city’s strong historical in-migration numbers as the fundamental driver. Observers see no hiccup to that growth on the horizon, in part because the recession may permanently cripple the Rust Belt, creating a vast reservoir of people with no option but to flow into the milk and honey West.
But whatever CBI Group Investments sales pitch, it’s not clear that investors like Buffett or Watsa, contrarian or no, are rushing to buy Sunbelt homes. “There’s a reason there are foreclosures, people: it’s because there was too much housing,” says Don Campbell, author of Real Estate Investing in Canada, who points to a February U.S. Census Bureau report that puts the number of vacant homes in the U.S. at a massive 19 million. “There are only 19 million properties in Canada,” he says. “The equivalent of all of Canada is sitting empty in the U.S.—that’s why everything seems so cheap.”
Still, Boyle thrills to his own contrarian boldness. That evening after the CBI Group Investments pitch, he did meet some who remained skeptical of the proposal. “Some of them said, ‘Yeah, but what if it never recovers?’ ” recalls Boyle. “Canadians are very cautious people. And they need to be kind of pushed into something. Someone has to tell them, tap them on the shoulder and say, ‘You know, this is a really good thing to do.’ ”
Swann, the rare sort of realtor who can quote Kipling and Maugham in conversation, believes in the indubitable power of the sun’s draw on the American masses—to a point. Acknowledging that in-migration has driven the Phoenix real estate market in the past, he wonders about the future. “We just went through an unprecedented boom and an unprecedented bust, and what happens after two unprecedented circumstances? The answer is: I don’t know—and anybody who tells you they do know is talking through their hat.”

CBI Group Investments Foreclosure funds: Sunbelted

CBI Group Investments Foreclosure funds: Sunbelted
You may have seen sales pitches for investment funds that hope to make money by swooping in on foreclosed properties in the U.S. sunbelt. At least half a dozen of these foreclosure funds have sprung up across Canada.
Our advice? Be wary.
A typical case is CBI Group Investments Arizona Acquisition Fund of Alberta, offered by CBI Group Investments of Calgary. It plans to buy homes in the Phoenix area, rent them out, then sell them when real estate prices rebound — which the fund figures will happen within five years. The fund promises to pay investors 6% a year on the money they invest, as well as give them 60% of net profits when the homes are sold.
Problem is, the returns aren’t guaranteed. In fact, the fine print in CBI Group Investments marketing material states that “the funds [sic] actual results performance or achievements could differ materially from those expressed by us.”
“That’s a red flag,” says Mark Dickey, senior communications adviser for the Alberta Securities Commission. “It’s easy for them to say, ‘It didn’t work out the way we thought.’ If that happens, you could lose your money.”
Before investing in any fund make sure it’s registered with the securities commission in your province. If not, that’s a red flag. If it is registered, see if it’s been involved in any violations you should know about.
For instance, if you look up CBI Group Investments executives on the Alberta Securities Commission (ASC) website, you’ll find that Keystone Real Estate Investment Corp., owned by the same group that manages CBI, recently ran afoul of regulators. This past summer Keystone reached a $250,000 settlement with the ASC after the company admitted that Keystone advertising included untrue claims about past projects and that it provided investment advice when it was not registered to do so. (CBI Group Investments says this was because of faulty legal advice.)
Even if a fund’s background checks out perfectly, investors should ask questions. The biggest question, of course, is whether U.S. real estate prices will quickly rebound.
Many observers think not. “The Phoenix market in particular still has 20% to 30% to fall,” says Robert Campbell, a real estate economist in San Diego.
Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate in Vancouver, is also skeptical. If you still want to bet on a rebound, he suggests you simply buy a house or condo in an area of the U.S. that your family enjoys. “You’ll need a 30% down payment but you’ll have control,” says Somerville. “And your family can enjoy the property for a few years, even if real estate prices don’t bounce back soon.”

CBI Group Investments Amid Housing Bust, Phoenix Begins a New Frenzy

With this sweltering desert city enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.
There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.
Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.
The low end of the real estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom.
In January, Mr. Jarvis began working as director of investor relations for Brewer Caldwell, a property management firm that had been approached by the CBI Group Investments, a real estate fund based in Calgary, Alberta. In its first foray into the American market, CBI Group Investments is buying 175 rental houses in Phoenix.
Still, their feelings are mixed. “It’s not our house anymore; it’s someone else’s,” said Mrs. Aguilar, who works for the state welfare department.
For CBI Group Investments, the deal is sweet. “This type of deal is absolutely not available in Canada,” said Jarrett Zielinski, a CBI Group Investments executive. “No city here has fallen by 50 percent, the way Phoenix has.”
The investment group is opening a new fund this week to buy another 160 Phoenix homes.

CBI Group Investments Offers Undervalued Phoenix Real Estate to Canadian Investors

CBI Group Investments, the new face of Keystone Real Estate Investments, has announced the launch of a fund that will allow Canadian investors to profit from the downturn of the Phoenix, Arizona housing market. The Arizona Acquisition Fund will raise up to 12.5 million (Cdn) to purchase approximately 175 single-family homes in the Phoenix area over the next 12 months.

"Most Canadians are starting to realize that we have ideal market conditions to invest in the U.S. thanks to a strong Canadian dollar and extremely low home prices due to the sub prime mortgage crisis. The Phoenix market remains an area of interest for baby boomers, so we expect that it will produce the greatest profit when it recovers over the next five years." explains Travis Cadman, co-founder of CBI Group Investments.

The CBI Group Investments Arizona Acquisition Fund is an opportunity for Canadian investors to enhance and diversify their portfolios without the traditional hassles associated with foreign real estate investments. Institutional financing, tenant prospecting, property management and sales processes will handled by CBI Group Investments and their extensive network of industry experts residing in Phoenix area.

"By making our move now, we're able to help our investors benefit from the down curve of the market cycle in Phoenix," added Ron Cadman, co-founder of CBI Group Investments. "We will hold and rent these homes during the upswing and then sell at higher market values."

For a minimum RRSP eligible investment of $10,000 investors in the CBI Group Investments Arizona Acquisition Fund will receive a 6% annual bond interest that will be disbursed as cash flow permits as well as a share in 60% of net profits when the homes are sold.

Both Ron Cadman and Travis Cadman are available to the media for interviews and comments about the CBI Group Investments Arizona Acquisition Fund, or about the real estate market and investments in the Phoenix, Arizona area.

About CBI Group Investments (The new face of Keystone)

Industry veterans and CBI Group Investments founders Ron and Travis Cadman have been land developers and investors for over 23 years. CBI Group operates Diamond Key Homes and develops commercial, recreational and residential property in addition to offering a range of real estate investments.

CBI Group: Investment Opportunity Capitalizing on Foreclosed and Liquidated Real Estate in Markets Across North America

CBI Group Investments, an Alberta based real estate investment company, today announced the launch of CBI Group Investments Property Income Corp.; an opportunity that will capitalize on the depressed real estate markets across North America by acquiring undervalued, foreclosed or liquidated properties in these markets.

"From an investment perspective, the present economic crisis is providing a rare opportunity for those with equity to invest in some of the lowest real estate prices in recent history. However, the tightening credit market has also presented a barrier to many who realize the tremendous deals to be had." said Jarrett Zielinski, Executive Vice President of CBI Group Investments.

The CBI Group Investments Property Income Corp. allows investors to earn strong income in a short-term investment and, at the same time, benefit from CBI Group Investments experience structuring profitable real estate portfolios that are balanced by asset class and geographical location.

With a low investment threshold of only $5,000, investors can select from a variety of customizable options to suit their risk tolerance and return preferences. For instance, investors have the option of receiving a 9.5% annual interest paid quarterly or 9.5% interest compounding annually paid at maturity (up to three year term). CBI Group Investments can be made with TFSA, RRSP, RESP, RRIF, LIRA, DPSP, RDSP and cash. For those investors who are wary about locked-in investments, the CBI Group Investments Property Investment Corp. offers liquidity rarely seen in the real estate investment industry; liquidity after 18 months.

" CBI Group Investments Property Income Corp brings together the legal framework and appropriate tax shelters so that like-minded investors benefit from CBI Group Investments experience building profitable and diversified real estate portfolios." said Zielinski.

CBI Group Investments is available to the media for interviews and comments about the CBI Group Investments Property Income Corp. or about the Arizona Acquisition Fund ; an investment opportunity in foreclosed single-family homes in Phoenix, AZ.

About CBI Group Investments

Formed in 2005 to provide the investing public with an opportunity to participate and profit from large-scale real estate projects, the CBI Group Investments team has combined their skill sets and experience to make real estate available to the investing public.

With an expert team including property acquisition, project development, investor relations, client communications, compliance and legal departments, CBI Group Investments is dedicated to selecting only those real estate assets with the most clearly demonstrated profit potential, and committed to structuring secure asset-backed investment opportunities.

CBI Group Investments innovative investment opportunities allow investors to participate in a broad range of real estate investment projects, including residential, multi-family, early-stage commercial, land banking and distressed asset acquisition opportunities. Current CBI Group investment opportunities include the CBI Group Investments Arizona Acquisition Fund and the CBI Group Investments Keystone Business Park.

CBI Group Investments to Host Arizona Real Estate Investment Seminar in Vancouver

CBI Group Investments, an Alberta based real estate investment company, will be hosting a real estate investment seminar in Vancouver to educate the public about real estate investments in the Arizona; an area experiencing some of the lowest real estate prices in recent history. The seminar will focus on their Arizona Acquisition Fund; an opportunity allowing individual investors to participate in the bulk purchase of homes in the Phoenix area.
"Last week we bought a house that was nearly $300,000 at the peak and closed it for $87,000. We're seeing distressed sales such as this on a daily basis. And because we are paying cash, closing quickly and, in some cases, negotiating directly with banks, we are able to purchase homes at lower prices than individual investors can." said Jarrett Zielinski, VP of Acquisitions at CBI Group Investments who is managing the purchase of the 175 homes the group is acquiring for the Arizona Acquisition Fund. "Individual investors may not understand the amount of due diligence and logistical hassles that are imminent when making a cross-border real estate purchase. Our seminar will show investors exactly how they can participate in the tremendous profit potential without the challenge of finding their own way in a foreign real estate market."
The seminar, taking place on February 19th at the Fairmont Hotel Vancouver (900 West Georgia Street) at 7pm, will provide statistically backed data about the current Arizona real estate market and forecasts for recovery. In addition, the CBI Group Investments seminar will explain the investment details and business operations of the Arizona Acquisition Fund including presentations directly from Tom Caldwell, President of Arizona's largest residential property management company and a member of the CBI Group Investments Arizona Acquisition Fund's Board of Directors.
Jarrett Zielinski is available to the media for interviews and comments about the seminar, the CBI Group Investments Arizona Acquisition Fund, or about the real estate market and investments in the Phoenix, Arizona area. To arrange an interview please contact Angela Joyce.
About CBI Group Investments
CBI Group Investments is a reputable, full service client team devoted to sharing knowledge of real estate and delivering unique, well-researched opportunities to investors. Thorough due diligence procedures coupled with an unrivaled depth of corporate personnel allows CBI Group Investments to discover groundbreaking residential, multi-family, resort, commercial developments and raw land properties to share with investors. Current CBI Group Investments investment opportunities include Arizona Acquisition Fund (Multi-family home investment in Phoenix, AZ) and the Keystone Business Park (Land syndication / commercial development in Balzac, AB). Current development projects include Diamond Key Homes (Multi-family homes in Red Deer, AB), VENU (Condominium development in Red Deer, AB) and The Lake House (Full ownership resort-style condos in Sylvan Lake, AB).

CBI Group Investments Offers Undervalued Phoenix Real Estate to Canadian Investors

CALGARY, ALBERTA--(Marketwire - May 26, 2008) - CBI Group Investments, the new face of Keystone Real Estate Investments, has announced the launch of a fund that will allow Canadian investors to profit from the downturn of the Phoenix, Arizona housing market. The Arizona Acquisition Fund will raise up to 12.5 million (Cdn) to purchase approximately 175 single-family homes in the Phoenix area over the next 12 months.

"Most Canadians are starting to realize that we have ideal market conditions to invest in the U.S. thanks to a strong Canadian dollar and extremely low home prices due to the sub prime mortgage crisis. The Phoenix market remains an area of interest for baby boomers, so we expect that it will produce the greatest profit when it recovers over the next five years." explains Travis Cadman, co-founder of CBI Group Investments.

The CBI Group Investments Arizona Acquisition Fund is an opportunity for Canadian investors to enhance and diversify their portfolios without the traditional hassles associated with foreign real estate investments. Institutional financing, tenant prospecting, property management and sales processes will handled by CBI Group and their extensive network of industry experts residing in Phoenix area.

"By making our move now, we're able to help our investors benefit from the down curve of the market cycle in Phoenix," added Ron Cadman, co-founder of CBI Group Investments. "We will hold and rent these homes during the upswing and then sell at higher market values."

For a minimum RRSP eligible investment of $10,000 investors in the Arizona Acquisition Fund will receive a 6% annual bond interest that will be disbursed as cash flow permits as well as a share in 60% of net profits when the homes are sold.

Both Ron Cadman and Travis Cadman are available to the media for interviews and comments about the Arizona Acquisition Fund, or about the real estate market and investments in the Phoenix, Arizona area.

About CBI Group Investments (The new face of Keystone)

Industry veterans and CBI Group founders Ron and Travis Cadman have been land developers and investors for over 23 years. CBI Group Investments operates Diamond Key Homes and develops commercial, recreational and residential property in addition to offering a range of real estate investments.
http://www.marketwire.com/mw/release.do?id=860893