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What is the average debt ratio for all nontraded REITs?

May 30, 2018

What is the average debt ratio of all nontraded REIT programs?

Answer: The average debt ratio for all nontraded REIT programs as of December 31, 2017, was 46.4%, compared to the average debt ratio as of December 31, 2016, of 46.9%. When the total of all debt for all nontraded REITs is compared to the total assets for all nontraded REITs, the ratio is 50.9% as of December 31, 2017, compared to 47.9% as of December 31, 2016.

For nontraded REITs with stable property portfolios and relatively stable financing, the book value of real estate assets will fall slightly each year due to depreciation and amortization, resulting in, all other things equal, a slightly higher debt ratio. Most nontraded REITs also calculate their debt ratios using the fair value of both assets and debt as a better reflection of their use of leverage.

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James Darren Roberson
August 22, 2017 at The National, the annual NPH Educational Conference
August 28, 2017

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