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Editor's note: Last week, the Business Journal reported the general reactions of the investment community to plans by Holly Corp. of Tacoma, a major apartment builder, to go public.
Because Holly represents the first of what could be a series of Northwest real estate companies to test the public markets, we offer here a more detailed analysis.
Investment advisers here and nationwide are asking some hard questions about the prospects of Holly going public as a real estate investment trust, or REIT.
Holly's public offering may succeed, said the skeptics among a half-dozen investment advisers interviewed, but not necessarily at the share prices and yields sought in the prospectus.
Here are some of the issues pinpointed by fund managers and advisers:
Is Holly asking a reasonable price for its properties?
This is extremely difficult to answer, because some Holly properties are still under construction or in lease-up, and several are held in a joint venture that will carry on after the REIT is established.
Also, a premium is typically paid for the assets of a publicly traded company with professional management and plans for growth, …