Non-Traded REITs: Go Mainstream or Die
Fundraising for the sector fell in 2016 due to the combination of impending regulatory changes and lackluster performance, notes Yardi Matrix Associate Director of Research Paul Fiorilla. The sector must continue to lower fees and improve liquidity to attract new investors.
June 21, 2017 | by Paul Fiorilla | Commercial Property Executive
mproving transparency and liquidity, as well as lowering fees, are at the top of the to-do list for the non-traded REIT market in 2017, challenges that will force the industry to transform and usher in new ways of doing business and new types of sponsors.
Fundraising for the sector—which began to decline in 2013—plummeted dramatically in 2016 due to the combination of impending regulatory changes and lackluster performance of the sector. Non-traded REITs attracted only $6.4 billion in 2016, down nearly 75 percent from the $24.6 billion raised in 2013, according to Robert A. Stanger & Co.
The situation could get worse before it gets better. Stanger CEO Kevin T. Gannon, speaking at the IMN Non-Traded REIT & Retail Investment Symposium in New York last week, forecast capital raising to decline further to $5.7 billion this year. Another ominous sign came last week, when industry leader W.P. Carey announced it was exiting the non-traded REIT business after more than 40 years to focus on its net-leased real estate portfolio.
The time (at Blue Vault's 2nd Annual Broker Dealer Educational Summit) proved extremely informative.