Coming off a disastrous 2016, sales of nontraded REITs could bounce back in 2017
Newly designed products and Blackstone Group’s entrance into the industry could pump up the market
Dec 27, 2016 @ 12:16 pm | By Bruce Kelly | Investment News
After a disastrous 2016, industry analysts and executives are cautiously optimistic that sales of nontraded real estate investment trusts will bounce back next year.
There are a number of reasons why sales of nontraded REITs, declined from nearly $10 billion in 2015 to $4.5 billion in 2016.
One was a new industry rule, known as 15-02 by the Financial Industry Regulatory Authority Inc., that increased pricing transparency for investors. But now financial advisers are growing more comfortable with REITs designed to counteract that rule. These REITs have different share classes and commission structures that pay the adviser over time rather than in one, large, upfront 7% commission that the standard A share pays.
Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.