How did the average returns to nontraded REIT shareholders who tendered their shares prior to the full-cycle events for those NTRs compare to the average returns to shareholders who held their shares until the full-cycle events?
Answer: For a sample of 39 REITs with third-party tender offers, those shareholders who invested in the first quarter of an NTR offering and held their shares until the full-cycle liquidity event had an average annualized total return of 3.21% compared to a negative average return of 3.32% to shareholders who tendered their shares, a difference in the annualized total return averaging a negative 6.52%. Tender offer prices in the sample averaged 32.7% less than the full-cycle price. This indicates that tender offers are more likely to be made for REITs that are underperforming, and at a significant discount to the eventual full-cycle values.
