For more than 20 years, CMG Partners, LLC and its affiliates have been in the business of providing liquidity options for shareholders of limited partnerships, non-traded REITs, and other securities with limited or non-existent trading options. CMG was formed based on the unmet demand from owners of illiquid investments who sought an efficient means to sell their shares. Since inception, we have purchased more than $30,000,000 of such securities, and completed over 10,000 transactions.
While the details of our business can be complex, the concept of our model is quite simple: An investor is provided liquidity where liquidity is scarce, and CMG is provided with an opportunity to purchase a security that is not easily acquired. In the U.S. today, there are millions of retail investors who have invested hundreds of Billions of investment dollars in securities that have very limited trading options. In other words, if an owner of these types of investments wishes to sell for whatever reason, they typically have very limited, if any, options available to them. On the other side, there are unique investment companies, such as CMG, who specialize in purchasing and managing portfolios of illiquid securities, and have knowledge, capital, time and expertise concerning the ownership of these special investments. A seller's need to cash out of an investment is matched with our need to invest our capital.
We encourage you to consider all your options when considering a sale of an illiquid investment. We certainly believe that CMG's liquidity offers are a very reliable and highly efficient option to choose from. In the event that you have an investment that you are considering selling, we would appreciate the opportunity to be of service to you.
In most cases, the types of securities that CMG is active in providing liquidity options for include:
- Real Estate Limited Partnerships & LLC's
- Non-traded Real Estate Investment Trusts (REIT's)
- Closely held/non-listed company shares
- Shares of non-traded community banks
Regardless of the type of security, CMG provides a valuable service by giving shareholders an ability to redeem their shares when they would otherwise be restricted. By doing so, CMG creates an avenue for investors to cash in their investment according to their own wants and needs. Because we are long term investors, with expertise in these special situations, we can bear the risks of holding the investment for the long-term.
For more detail concerning non traded securities, the following information is provided for your review.
A Real Estate Limited Partnership (or Real Estate based LLC) is a business organization with a general partner, or managing member who manages the business of the entity, and typically has many limited partners or members (investors). Unlike most stocks and bonds, most Limited Partnerships and similarly structured LLC's do not trade on any securities exchange, and therefore many have limited liquidity choices available to their investors. Most are formed to be long-life investments, typically 10-20 years. Unless an investor is able to sell their interest back to the issuer or to a third party, such as CMG, they generally must hold until the investment is brought to a conclusion by its management. In some cases, limited partnerships will provide investors with a redemption option, though most do not.
A Real Estate Investment Trust (REIT) is a company that owns and operates real estate such as office buildings, apartments, shopping centers, hotels, and warehouses. Many REITs are public companies and are listed on a national stock exchange, the New York Stock Exchange (NYSE) for example. Today however, there are a large number of non-publicly-traded REIT's often referred to as "non-traded" REITs. A non-traded REIT, (also can be referred to as an unlisted or private REIT) is a real estate investment trust that is not traded on a securities exchange. Most are formed to be medium-term investments, typically 7-10 years. In the end, generally the REIT will provide a "liquidity event" for its investors by listing its shares for public trading, merging with an already public REIT, or selling all its assets and dissolving. Until that event, in some cases, non-traded REIT's provide investors with a redemption option, typically termed a Shareholder Redemption Program, or SRP. In those cases, the SRP is usually the best option for a shareholder wanting to sell.
However, some non-traded REIT's do not have SRP's in place, or the SRP has been suspended. In some cases, a SRP is in place, but has tight restrictions in place, for example, only a limited amount of money is set aside each year to redeem shares, or the SRP is only available to shareholders with hardship issues- such as a death or disability. In such cases, a long waiting list can develop- sometimes taking multiple years to work through all the shareholders who want to be redeemed. As such, some SRP's are essentially "non-functioning" SRP's. In those cases, unless a shareholder is able to sell their interest to a third party, such as CMG or an aution buyer, they generally must hold until a liquidity event occurs. Given the large number of shareholders of non-traded public REITs, some shareholders will at some point need or want to liquidate their shares. CMG provides these shareholders with a means to sell their shares in an effective and efficient manner.
Closely held and non-publicly traded stocks are typically shares of small companies, community banks for example, which also do not have an active market for trading of their shares. CMG also provides liquidity options for shareholders of these securities.
Auction market alternatives. Aside from liquidity options provided by specialty investment companies like CMG, many of the securities discussed may be auctioned for sale through auction companies. In most cases, the shares are presented for sale in an auction, and potential buyers may bid for your shares. Auctions are a legitimate alternative to sell illiquid shares, and we do not discount their appropriateness for some. There are however some limitations as compared to a firm purchase offer that you would receive from CMG. First, in an auction, you do not have a firm price established at which you are selling your shares, but rather a "sale to the highest bidder" arrangement. This can result in a higher or lower price than what we may be offering for your shares. With CMG, you know what your price is. Second, auction trades are reduced by relatively steep commissions and various fees, often amounting to 10% or more of the transaction amount. By contrast, because our offers are not reduced by these expenses, the net proceeds you would receive from one of our offers could still exceed the net proceeds of an auction trade, even if the auction trade is completed at a higher price. Third, auction transactions often take about 3 months to complete, in our experience. Transactions through CMG are normally completed in half the time as an auction trade, and normally with much less burdensome paperwork. In a sale to CMG, you know what your price is up front, and you can get your cash promptly.