As for non-traded REITs, there has been a tremendous decline in sales over the past few years. The industry, which peaked at $20 billion in 2013, is forecast to raise $6 billion in 2016. The industry has been largely affected by an abundance of regulatory change that has triggered structural changes. Tyler Green of The Bowman Law Firm moderated a panel with Peter Magnuson, Securities America, Allan Swaringen, JLL Income Property Trust, and John Norris, Dividend Capital Securities that addressed these changes and where the product may go in the future.

Largely affecting the non-traded REIT industry is the new DOL fiduciary rule and the recently implemented FINRA regulatory notice 15-02 that provides increased transparency.

Speaking to the audience, Norris said: “Sales are down… But they never put that in context to other products in the industry. If any of you have any friends in the variable annuities industry or the mutual fund industry – are their sales up or down over the past three of four months? Down.”

Swaringen mentioned that institutional investors generally allocate eight to 10 percent of their portfolio to real estate, while retail investors typically average about two percent. Non-traded REITs exist to allow retail investor to real estate.

Panelists agreed that the DOL fiduciary rule is trumping all and accelerating changes in the non-traded REIT industry. The rule “caused a slow-down in sales due to new questions about what the rule is,” said Norris. “So much is unknown today, although it's clearer today than six months ago. We can expect to see loads continue to pick up as we move forward, and the DOL will continue to be defined to investors.”

“Broadly,” Swaringen says “you're going to see more consolidation in the industry. There has been a very broad number of sponsors, number of products out there and you're going to see that shrink. Real estate is a very competitive industry.”

LAS VEGAS—ADISA's 2016 Annual Conference recently took place in Las Vegas, where nearly 1,000 attendees joined for educational opportunities in alternative and direct investments, as GlobeSt.com reported. In particular, the hottest topics of the conference included the recently passed Department of Labor fiduciary rule, interval funds and Section 1031 exchanges. The conference also included a forecast for where real estate investment trusts are headed.

Taylor Garrett of Mountain Dell Consulting, presented the latest Section 1031 market research from his firm at the conference, hosting a panel of experts that included Louis Rogers, Capital Square 1031, Stephen Decker, IPX1031, and Dan Cullen, Baker & McKenzie.

As presented by Garrett, the Section 1031 industry, primarily through Delaware Statutory Trusts, raised just under $1.1 billion in 2015. As of September 16, 2016, the industry had raised approximately $1.1 billion in equity, and is expected to hit $1.4 billion by the end of the year. Garrett stated that the Section 1031 “has become a very vibrant industry once again. Approximately $1.4 billion in equity raise was last seen in 2005, just before the peak in 2006.” That year, the industry raised its highest equity in one year—approximately $3.6 billion.

In terms of product types, apartments continue to reign as the number one product type for DST investments, with office just behind it. The suburban office product is no longer appealing as it was during the TIC era, but the piqued interest in medical office space keeps the sector afloat as the second hottest product type for DST investments. Overall, the industry is seeing newer sponsors and bigger programs coming out, including a $120 million deal that hit the market this summer. Garrett mentioned deals like these may be due to DST programs allowing for more investors, and therefore larger, grouped deals. TICs only allowed a max of 35 investors, while DSTs allow for up to 1,999.

As for non-traded REITs, there has been a tremendous decline in sales over the past few years. The industry, which peaked at $20 billion in 2013, is forecast to raise $6 billion in 2016. The industry has been largely affected by an abundance of regulatory change that has triggered structural changes. Tyler Green of The Bowman Law Firm moderated a panel with Peter Magnuson, Securities America, Allan Swaringen, JLL Income Property Trust, and John Norris, Dividend Capital Securities that addressed these changes and where the product may go in the future.

Largely affecting the non-traded REIT industry is the new DOL fiduciary rule and the recently implemented FINRA regulatory notice 15-02 that provides increased transparency.

Speaking to the audience, Norris said: “Sales are down… But they never put that in context to other products in the industry. If any of you have any friends in the variable annuities industry or the mutual fund industry – are their sales up or down over the past three of four months? Down.”

Swaringen mentioned that institutional investors generally allocate eight to 10 percent of their portfolio to real estate, while retail investors typically average about two percent. Non-traded REITs exist to allow retail investor to real estate.

Panelists agreed that the DOL fiduciary rule is trumping all and accelerating changes in the non-traded REIT industry. The rule “caused a slow-down in sales due to new questions about what the rule is,” said Norris. “So much is unknown today, although it's clearer today than six months ago. We can expect to see loads continue to pick up as we move forward, and the DOL will continue to be defined to investors.”

“Broadly,” Swaringen says “you're going to see more consolidation in the industry. There has been a very broad number of sponsors, number of products out there and you're going to see that shrink. Real estate is a very competitive industry.”