A Non-Traded REITs Primer

19 Pages Posted: 1 May 2012 Last revised: 3 May 2012

See all articles by Tim Husson

Tim Husson

Securities and Exchange Commission

Craig J. McCann

Securities Litigation and Consulting Group

Carmen Taveras

Securities Litigation and Consulting Group

Date Written: March 1, 2012

Abstract

Despite the widespread reduction in U.S. real estate values over the past few years, the share prices of many non-traded REITs have remained at or near their initial offering levels, giving investors the illusory sense of low price volatility and preserved value. Somewhat belatedly, non-traded REITs have recently been the subject of increased regulatory scrutiny.

In this paper we discuss the structure and features of non-traded REITs, highlighting the high fees and significant conflicts of interests that could lead to loss of shareholder value. We also examine the financial statements of non-traded REITs and highlight several aspects that may be cause for concern amongst investors. Finally, we discuss the potential unsuitability of non-traded REITs for retail investors, as well as the implications of our findings to the even less transparent private REIT market.

Keywords: real estate, REIT, non-traded

Suggested Citation

Husson, Tim and McCann, Craig J. and Taveras, Carmen, A Non-Traded REITs Primer (March 1, 2012). Available at SSRN: https://ssrn.com/abstract=2049502 or http://dx.doi.org/10.2139/ssrn.2049502

Tim Husson (Contact Author)

Securities and Exchange Commission ( email )

100 F Street, NE
Washington, DC Washington, DC 20549
United States
202-551-6803 (Phone)

Craig J. McCann

Securities Litigation and Consulting Group ( email )

3998 Fair Ridge Drive, Suite 250
Fairfax, VA 22033
United States

Carmen Taveras

Securities Litigation and Consulting Group ( email )

3998 Fair Ridge Drive, Suite 250
Fairfax, VA 22033
United States

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