Non-Traded REIT, BDC Sales Suffer As Pricing Shifts
SEPTEMBER 28, 2016 |
Facing a shifting regulatory landscape, sales of non-traded REITs and business development companies look to be off about 50 percent this year.
For the same reason, sales are shifting to lower-cost share classes.
Through August, sales of non-traded REITs were $3.15 billion, down 55 percent from the same period a year ago, according to the Robert A. Stanger & Co., which tracks the industry.
Sales of BDCs through August were $1.07 billion, down 62 percent.
Non-traded REITs, the bigger category, should reach around $5 billion this year — about half of last year — said Keith Allaire, managing director at Stanger.
“That’s primarily due to the change from full front-load structure, to a trail commission structure,” he said. “It’s a matter of getting new products in the pipeline, and at B-Ds trying to figure what structure they want on the platform.”
Of the more than $3 billion raised by REIT sponsors so far this year, 54 percent was in low or no-load products, Allaire said. That’s a marked change from the same time last year, when just 7 percent of sales went to lower-cost products.
Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.