Since the beginning of 2012, 16 nontraded real estate companies have elected REIT status, and as of March 28 those REITs accounted for nearly 590 million shares outstanding.
During iGlobal’s recent Global REIT Summit: West conference in San Francisco, Resource Real Estate Opportunity REIT Inc. CEO Alan Feldman framed 2013 as a “breakout” year for nontraded REITs. A report in February stated that sales of nontraded REIT shares doubled in 2013 compared to 2012, hitting $20 billion.
However, the picture for nontraded REITs is not so cut-and-dried. In early February, FINRA proposed rule changes that would require brokers to factor in fees and commissions when listing nontraded REIT share prices. This may be welcome news for some, as there has been much scrutiny from the real estate investment industry when it comes to the lack of transparency on the fees associated with sales of nontraded REIT shares. The report noted that nontraded REIT broker-dealers and sponsors are “anxiously waiting” for the ruling on the proposal, as well as its effect on share sales should it be approved.
Since the beginning of 2012, 16 nontraded real estate companies have elected REIT status, and as of March 28 those REITs accounted for nearly 590 million shares outstanding.
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