Call Now For a Free Consultation:
(614) 502-6165

"New Breed" of REITs Remains Flawed Despite Changes in Liquidity and Valuation

Clarion Partners Americas LLC and American Realty Capital have recently begun pitching a "new breed" of non-traded real estate investment trusts (REITs), which supposedly addresses the "old breed's" problems of illiquidity and untimely valuation of units. According to an Aug. 28 InvestmentNews article, the new non-traded REITs will be valued daily and will place a larger percentage of assets in liquid products like cash and bonds.

Despite these changes, however, a lot of the old problems still exist.

"New" non-traded REITs, like old REITs, aren't listed on exchange. The amount of units available for repurchase is still capped around 5 percent. And, the number of units available for redemption is still up to the trust's management. Additionally, the initial valuation of the product may be below what investors pay for it, depending on how much is taken out initially for fees.

"For example, if investors pay $10 per unit for a non-traded REIT and then, after commissions and various fees, see it listed immediately at $8.70, that would ‘leave a bad taste in investors' mouths,'" said Stacey Chitty, a partner with Blue Vault Partners LLC, according to the InvestmentNews article. (Blue Vault Partners LLC analyzes the non-traded-REIT market.)

For more information about the risks of non-traded REITS, read our posts on mortgage REITsunlisted REITs, and Apple REIT 10.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation

Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
6140 Parkland Blvd.,
Suite 330
Mayfield Heights, OH 44124
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
Follow Us
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram