Clients Increase Their Demands to Cash Out of REITs Amidst Potential Recession

Posted on February 2nd, 2023 at 1:50 PM
Clients Increase Their Demands to Cash Out of REITs Amidst Potential Recession

From the Desk of Jim Eccleston at Eccleston Law.

Investors collectively have rushed to cash out of some non-traded real estate investment trusts (REITs) during the fourth quarter, which has boosted the demand to redeem shares of net asset value REITs by $1 billion, according to investment bank Robert A. Stanger & Co.

Furthermore, KKR & Co., another private equity firm that recently entered the REIT industry, announced that investors’ demands to redeem shares surpassed internal restrictions, which has prompted KKR to refuse some investors’ requests to initiate a redemption. KKR Real Estate Select Trust announced within the last month that it had received repurchase requests of $128 million, or 8.1% of the fund’s aggregate NAV, according to a filing with the Securities and Exchange Commission (SEC).

Stanger estimated that non-traded REIT investors redeemed $4.7 billion in shares over the last three months of 2022, compared to only $3.7 billion during Q3. Another concern regarding non-traded REITs is that redemptions easily outpaced sales during the last quarter. Stranger predicts that the industry should be prepared for more investor redemptions in 2023.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

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