Nontraded REIT Sales Slump Amid Market Uncertainty

Posted on July 3rd, 2024 at 12:00 PM
Nontraded REIT Sales Slump Amid Market Uncertainty

From the desk of Jim Eccleston at Eccleston Law

InvestmentNews recently covered the sluggish start to nontraded real estate investment trust (REIT) sales in the current year, observing that the slump reflects the challenges facing commercial real estate investors, hinting at potential devaluation in certain REITs, especially net asset value (NAV) products.

Unlike listed REITs, nontraded REITs lack a market-driven valuation mechanism. Instead, they rely on internal appraisals to gauge their real estate assets' worth, a critical factor in determining their overall value.

InvestmentNews shared data from Robert A. Stanger & Co. Inc. The data revealed a significant drop in nontraded REIT sales in the first two months of this year, down to approximately $900 million. This decline, with an annualized rate of $5.4 billion, contrasts sharply with previous years' sales figures.

The deteriorating performance of listed REITs, experiencing declines of over 30 percent, raises concerns about when NAV REITs may follow suit. The impact of rising interest rates and the long-term effects of COVID-19, particularly on office occupancy rates, have exacerbated the challenges facing the commercial real estate market.

Key players like Blackstone Real Estate Income Trust Inc. (BREIT) have witnessed fluctuating net asset values, prompting speculation about potential downward adjustments. Market observers anticipate NAV reductions, with estimates suggesting a potential 30 percent decrease based on prevailing market trends.

According to InvestmentNews, investors are advised to consider divesting their NAV REIT positions before any impending value adjustments. NAV REITs typically offer
limited liquidity programs, making it crucial for financial advisors and their clients to act prudently in light of market uncertainties.

 

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

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

I want to thank you for your excellent professional representation. It was greatly appreciated.

Michael M.

LATEST NEWS AND ARTICLES

February 18, 2026
American Portfolios Ordered to Pay $4.6 Million in Restitution Over Cash Sweep Program Disclosures

The Financial Industry Regulatory Authority (FINRA) has ordered American Portfolios Financial Services to return $4.6 million to customers and pay monetary sanctions after determining that the firm overcharged investors and failed to properly disclose how it generated revenue through a cash sweep program.

February 17, 2026
FINRA Fines Kingswood Capital Partners $150,000 for Supervisory Failures in GWG L Bond Sales

The Financial Industry Regulatory Authority (FINRA) censured and fined San Diego–based broker-dealer Kingswood Capital Partners $150,000 after finding supervisory failures tied to sales of high-risk GWG L bonds.

February 16, 2026
FINRA Removes Arbitrators in Stifel Case, Drawing Scrutiny Over Impartiality Standards

FINRA agreed to remove two potential arbitrators from an upcoming Stifel Financial arbitration tied to former Miami-based broker Chuck Roberts, a move that could carry broad implications for investor arbitration.