Non-traded REITS
48 RepliesJump to last post
Hey everyone,
I was wanting your input about non-traded REITS. Does a client really benefit from such a product especially if the REIT never goes public? Thanks.Yes and some of them do go public or get purchase by other public REITs… Also my clients are getting 6.75% right now. Of course some are in a some other ones where they are only getting 5%, but still better than the fixed annuity or CD, but there is always the upside at the end…
If the REIT never goes public, you still collect 5-7% with little chance of principle fluctuation… however, most all of the REIT’s have the specific goal of capital appreciation from some liquidity event and even have a deadline in the prospectous.
the Non-traded REIT's have been one of the best investments I've used in my career. Great income and stability for portfolios and realistically a double didget total return once the REIT goes full cycle. I've sold two REIT's that have had liquidity events and both have provided great overall returns to shareholders. It's also something your wirehouse/EDJ guys can't sell so just another way to differentiate yourself from them. And they pay quite nice to boot.How do you go about buying them as an indie? Do all indie B/D’s allow them? Who would you contact?
your B/D has to have a selling agreement with each specific REIT company you offer. Call your b/d and see if/who they may offer. I'm at a pretty large indy b/d and am amazed by how many of the brokers know nothing of these investments.
My b/d has selling agreements with all the big names: Inland, KBS, Cole, Hines, WP Carey, Wells, Grub and Ellis, Dividend Capital, and maybe a few others. I've used most all of these to some degree but most with Inland over the years as they've been around a while.I think Ameriprise can do some also… Most indy’s allow, sometimes you need to get a company added to the list… I enjoy Cole, Inland, KBS and occaisionally WP, but they last forever.
If I recall, you are with RJFS. Contact the Alternative Investment Group (AIG) w/ Raymond James. They have Non-Traded REITS (Hines is the only one I recall), Hedge Funds, and something else I can't remember. For Hines, they have one that pays you upfront, and one that doesn't (for fee-based business). Call them.How do you go about buying them as an indie? Do all indie B/D’s allow them? Who would you contact?
They’re great, but only for the portion of assets used to generate income, that don’t need to be liquid. Shouldn’t be a replcement for CD’s/savings that you might need to tap. Great income alternative to annuities.
Some of the more conservative options allow liquidity. Client's love the steady income.They’re great, but only for the portion of assets used to generate income, that don’t need to be liquid. Shouldn’t be a replcement for CD’s/savings that you might need to tap. Great income alternative to annuities.
be extra cautious with them right now. in other words, due diligence is a must in the current commercial market. you really need to know what they own and how they are structured.
I agree. Would look at the underlying properties… Cole for example has lots of Walgreens, Best Buy, Sams Club… I like those companies, not concerned about them closing stores.
My indy B/D allows a maximum of 25% of a client's total net worth for a reit, with the most aggressive risk, so there are a few backstops in place. Of course it doesn't replace good due dilligence and suitability. Cole right now deserves a solid look (based on their property portfolio) and W.P. Carey does corporate leasebacks of HQ's with a decent dividend. If I were at a wirehouse/jones and couldn't sell REITs, I would kill myself. They're a great solution for some clients, steady income, and steady NAV on the statement before they go public (no annoying phone calls about market fluctuation). plus (not that this should be a consideration when recommending anything), it pays 7 beans to the broker...be extra cautious with them right now. in other words, due diligence is a must in the current commercial market. you really need to know what they own and how they are structured.
If illiquidity is not an issue and income is I would look at an all cash triple net lease private placement instead of a reit. Typically only for accredited investors. Single property, 15 plus year corporate lease, A credit rating, large corporation with good debt/equity ratio. This is very transparent, with stable cash flow and a hard asset (real estate that may hedge inflation). Basically you own part of a building and should get over 7% with 25% tax deferred due to amortized depreciation.
[quote=cobia]
If illiquidity is not an issue and income is I would look at an all cash triple net lease private placement instead of a reit. Typically only for accredited investors. Single property, 15 plus year corporate lease, A credit rating, large corporation with good debt/equity ratio. This is very transparent, with stable cash flow and a hard asset (real estate that may hedge inflation). Basically you own part of a building and should get over 7% with 25% tax deferred due to amortized depreciation.
[/quote] Do you have to bang on tenants' doors to get the rent check?If I recall, you are with RJFS. Contact the Alternative Investment Group (AIG) w/ Raymond James. They have Non-Traded REITS (Hines is the only one I recall), Hedge Funds, and something else I can't remember. For Hines, they have one that pays you upfront, and one that doesn't (for fee-based business). Call them.[/quote] Thanks Wet, thats what i was looking for. Whats the advantage of non public vs public REITS - is it just the possibilty of an IPO?[quote=Sportsfreakbob]How do you go about buying them as an indie? Do all indie B/D’s allow them? Who would you contact?
[quote=Sportsfreakbob]
Whats the advantage of non public vs public REITS - is it just the possibilty of an IPO?[/quote] I only have casual knowledge of them. I would let another member chime in.