New Best Practices Spur Fundraising for Non-Traded REITs
June 10, 2019 | Beth Mattson-Teig | Nreionline.com
Non-listed REITs posted a “blockbuster” month of fundraising in April with nearly $1 billion flowing into the sector. According to the latest data from Robert A. Stanger & Company, the year-to-date fundraising total of $2.7 billion (through April) is more than the $1.3 billion raised during the same period in 2018.
The rise in fundraising is due to a combination of factors. The non-listed REIT industry has done some heavy lifting over the past few years to reduce heavy fee structures and improve transparency and reporting. Part of those efforts is due to regulatory compliance. FINRA 15-02, which was introduced in 2016, requires all non-traded REITs and direct participation programs (DPPs) to include more frequent estimated values on investor account statements.
The increased focus on transparency is giving financial advisors and investors more insight into a sector that, in many cases, is performing as well or better than publicly-traded REITs—with the added advantage of less volatility. Non-listed REITs have posted strong numbers over the past three years. At the end of first quarter, NAV REITs were outperforming listed REITs on a three-year period with cumulative returns, including distributions and capital appreciation, at 22.1 percent vs. 19.1 percent, according to the Spring IPA / Stanger Monitor. Lifecyle REITs were trailing with three-year returns at 15.1 percent.
Blue Vault helps me to stay well informed on the financial status of both open and closed nontraded REITs and BDCs, so that I can help my clients better understand the product, before they make the decision to invest and after.