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A Non-Traded REITs Primer

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

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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