What is a non-traded REIT?
A REIT is a real estate investment trust, with certain tax advantages, that purchases and sometimes operates real estate like office buildings and shopping centers. Non-traded REITs are not market traded, meaning that other than by private sale or sale on a secondary market, a person cannot liquidate the investment until the REIT has a “liquidity event”. A liquidity event may result from listing the REIT on a public market or a sale of assets within the REIT that results in a distribution or liquidation. There may or may not be a liquidity event on the near horizon, should you need to liquidate.
Unfortunately, many investors purchased non-traded REITs without being fully apprised of the risk that distributions might cease, REIT values might fall and there may be no place to sell the investment.
FINRA (The Financial Industry Regulatory Authority) published and Investor Alert that explains the workings of the investment as well as the difference between a non-traded REIT and an exchange-traded REIT. If you own a non-traded REIT or are thinking of buying one, you would be wise to read it.
We have warned in the past that future distributions may not be assured and values are not certain. For years, non-traded REIT values were reported on customer monthly statements at the original purchase price, notwithstanding the dramatic market losses caused during 2008. Only recently has FINRA required REITs to report updated share values. For many years investors may have been unaware that their investment may have declined 50% or more in value.
As recently reported, the following non-traded REIT shares have suffered dramatic losses since they were first offered:
Non-Traded REIT Loss
Behringer Harvard Opportunity REIT I (58.8%)
Behringer Harvard REIT I (53.6%)
Behringer Harvard ST Opportunity Fund (96%)
Cornerstone Core Properties (71.8%)
Inland Western Retail Real Estate Trust (30.5%)
KBS Real Estate Investment Trust, Inc. (48.4%)
Inland Western Retail Real Estate Trust recently changed their name to Retail Properties of America, no doubt to try to freshen their image.
If you have losses as a result of purchasing non-traded REITs, we may be able to help. We are a law firm specializing in the recovery of stock market losses. Located in Boca Raton, FL with a nationwide practice. Free consultation. Contact us at 561-391-1900 or visit our website.