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Number of Non-Traded Reits Growing

ATLANTA-In 2009, 12 new non-traded REITs were created, a record; they attract a different kind of investor from publicly-traded REITs.

By Hortense Leon | Updated on May 12, 2010

ATLANTA-A spokesman for BlueVault Partners, LLC, an Atlanta-based company which does research on non-traded REITs, says that in 2009 12 non-traded REITs were launched, a record. Non-traded REITs are becoming popular, because they offer higher yields than publicly traded REITs, says a spokesman for BlueVault. But comparing these two kinds of REITS may be a false comparison.

“An investor in a non-traded REIT wants the security of a steady income stream based on cash flow from the property, while the traded REIT has ups and downs,” he says. The difference between the two is a little like the difference between stocks and bonds. “Bonds are safe, while stocks will give the investor appreciation on the stock price.”

Between 2000 and 2010, the number of real estate sponsors offering non-traded REITs grew from six to 29, according to BlueVault. Assets under management for the industry are estimated to be $68 billion and represent 20% of the total market capitalization for all publicly-registered REITs. Non-traded REITs are publicly-registered and must file regular reports with the SEC, even though they are not publicly traded.

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