Wednesday, March 7, 2012

SLCG Research: Non-Traded REITs

By Tim Husson, PhD and Carmen Taveras, PhD

We've posted a new working paper on our website that brings together much of our research related to non-traded Real Estate Investment Trusts (REITs).  In it, we discuss the history and structure of non-traded REITs as well as differences between non-traded REITs and other avenues for gaining exposure to real estate.  We highlight the dizzying array of fees and conflicts of interest embedded in these companies.  We demonstrate that non-traded REITs are often misleadingly valued, heavily leveraged, and financially unsustainable.

Real estate investments now come in a wide variety of forms, and retail brokers and investors may be surprised to learn that the differences between real estate mutual funds, ETFs, REITs, Tenants in Common (TICs), and other investments can be substantial and subject investors to unnecessary risks.  We will continue to develop research products that better illuminate these differences and help bring transparency to this often misunderstood market.

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