What’s Ahead for Non-Traded REIT Sector? Rebound Expected in 2018 Driven by Large Institutions, Small Investors Alike
December 7, 2017 | Randyl Drummer | CoStar
The amount of funds raised by non-traded REITs is expected to hit a 15-year low for 2017 amid increased federal regulatory scrutiny and pressure on companies to reduce their fee structures and increase transparency into their operations.
At least two large sponsors of nonlisted trusts have exited the space in recent months. W. P. Carey Inc. (NYSE: WPC), a major player which had sponsored non-traded REITs since 1990, decided to exit the business in June. In a similar move to focus on its real estate portfolio, net-lease operator VEREIT, Inc. (NYSE: VER) agreed to sell its Cole Capital nonlisted REIT operator to an affiliate of Los Angeles-based CIM Group, Inc. in a transaction valued at up to $200 million.
Non-traded REIT fundraising will end 2017 at $4.2 billion, a nearly 79% plunge from the $19.6 billion raised during the sector’s 2013 peak, according to sector consulting firm Robert A. Stanger & Co. Nearly half that total, about $2 billion, will be generated by just one player, Blackstone Group’s nascent Blackstone REIT, which began trading this year.
However, Stanger and other analysts see a rebound in the future.
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.