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Is the traditional full-commission nontraded REIT on the way out?

December 15, 2016

Is the traditional full-commission nontraded REIT on the way out?

December 8, 2016 | by Thomas Yeatts | S&P Global Market Intelligence

More and more nontraded REITs are looking to convert to daily net asset value, or daily NAV, REITs, a next-generation nonlisted product that gives investors the benefits of direct real estate investment but with improved liquidity, market observers said at a recent conference.

“I probably give more presentations about this than anything else,” Kevin Gannon, managing director at the investment banking firm Robert A. Stanger & Co. Inc., said of the conversions. He noted that nontraded REITs representing more than $10 billion of capital have approached Stanger with an interest in converting to daily NAV products.

Some say the rise of daily NAV REITs and other deferred-commission products, like T shares, are marginalizing so-called A shares, the traditional, full-commission nontraded REIT product.

“I don’t know when A shares all of a sudden became the bad guy,” Jim Manouse, senior vice president of national accounts at Lodging Opportunity Fund, said at IMN’s Nontraded REIT & Retail Alternative Investment Symposium last week in Dana Point, Calif.

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John E. Moriarty, ChFC
December 2015
February 3, 2016

I have been in the financial services industry for 20 years and our firm provides an education platform that gets clients to “think differently” about their financial picture.  For many years we have communicated to clients the need to diversify their portfolios using alternative asset classes and more specifically, private non-traded investments.  Due diligence on these types of financial vehicles is essential and when I learned about Blue Vault in 2010, our firm immediately began using their material as a tool to build confidence in the minds of our advisors on which alternatives to recommend to clients.  I am impressed with the way Blue Vault continues to add value to their subscribers and I view their publication as a tremendous resource in today’s complex world.