The Financial Industry Regulatory Authority (FINRA) recently launched an
alert, warning investors to perform careful reviews before investing in
public non-traded real estate investment trusts (REITs).
When interest rates are low, investors can be tempted to seek out investment
products offering better yields. One of those products that is becoming
increasingly popular is the publicly registered non-exchange traded REIT.
A significant difference between non-traded REITs and exchange-traded
REITs is, as its name implies, that non-traded REIT shares do not trade
on a national securities exchange.
Why does this matter? There are a few reasons:
These products can be illiquid for eight years or longer
Investors are extremely limited when it comes to early redemption of shares
Selling these types of shares can warrant high fees that eat into the investor’s
The dividends investors receive are not solely from earnings, but can include
The Truth About Non-Traded REITs
Non-traded REITs are generally riskier than exchange-traded REITs. If you
are considering this product as an investment option, familiarize yourself
with the benefits, risks, features, and fees.
Diversify your investments
As with many things in life, it can be risky to put all your eggs in one
basket. It is no different for investments, particularly non-traded REITs.
There are no guarantees
With non-traded REITs, your initial investment is not a guarantee. This
amount can increase or decrease in value.
Look at more than just distributions
It can be tempting to focus on the distributions the non-traded REIT is
producing in the moment, but remember that these distributions are subject
to change. Sometimes they are suspended, and in other cases, they stop
Keep an eye on redemption policies
If you do invest in a non-traded REIT, remember that it’s hard to
get money out of this type of investment when you need it, so watch out
for changes in redemption policies.
Protect your retirement
Your retirement money is precious. Don’t risk it by investing large
portions of it into a non-traded REIT.
Be wary of public offering announcements
“It’s about to go public!” If you’ve heard that
before in regard to a non-traded REIT, be cautious. Because the public
offering process is so long and arduous, many times, nothing ever comes
of claims like this.
For more information, we invite you to watch our video
The Dangers of Non-Traded REITs. Meyer Wilson helps investors recover losses caused by fraud and misconduct.
If you suffered substantial investment losses, please contact our attorneys
today for a
free review of your legal rights and options.