According to a study published in the Investment News analyzing the share value of the eight largest nontraded REITs, these alternative investments have not fared well. According to the study these eight raised over $30 billion, which is now worth less than $20 billion.
Unfortunately retirees, relying on a dependable income stream are some of the hardest hit. Offering share prices were generally $10 for these investments. Here is the “estimated value” as reported by each company:
Retail Properties of America $3.20
Inland American REIT $7.22
Behringer Harvard REIT $4.64
Wells REIT II $7.47
KBS REIT I $5.16
CNL Lifestyle Properties $7.31
Dividend Capital REIT $6.69
Hines REIT $7.78
As implied in their name, nontraded REITs do not trade on any conventional exchange, therefore if liquidity is needed, say for health or living expenses, the only option is a private secondary market. As we have previously reported, these secondary markets discount the company “estimated value” by 25% or more upon sale.
Many investors were convinced to purchase nontraded REITs with promises of dependable income streams, steady value and the ability to sell. Many REITs have ceased distributions and cancelled redemption programs leaving investors with no cash flow and no ability to liquidate.
If you have questions about your REIT investment or other stock market losses, please do not hesitate to contact us. We have been helping investors for over twenty years.
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Rex Securities Law
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