Non-Traded REITs have been in the news recently. They typically invest in sector specific real estate programs, targeting stable, fully occupied properties subject to long-term leases to strong credit tenants. They are thus able to generate immediate, durable, rent-driven cash flows from the inception of the investment as capital is deployed without a cash drag. Much like traditional private equity core real estate investing, they aggregate property through acquisitions and build diversified portfolios by tenant, geography, industry and lease duration. They return value from these aggregated portfolios via asset sales, public listings or mergers, usually over a five- to seven-year timeframe.
My take in a past podcast interview: 1:19 The case; 6 Market size;7:30 Investor type;9:55 Illiquidity premia; 11:52 Regulation; 13 Returns; 14:45 Capital raising; 16 Growth; 18 Transparency and industry evolution
Sameer Jain discusses the advantages of non-traded REITs as compared with publicly traded REITs. During this interview he discusses the size and historic returns of the non-traded REIT industry, as well as its regulatory environment, which types of investors they are best suited to, and what investors get in return for the illiquid nature of this particular real estate investment vehicle.