Is the traditional full-commission nontraded REIT on the way out?

December 15, 2016

Is the traditional full-commission nontraded REIT on the way out?

December 8, 2016 | by Thomas Yeatts | S&P Global Market Intelligence

More and more nontraded REITs are looking to convert to daily net asset value, or daily NAV, REITs, a next-generation nonlisted product that gives investors the benefits of direct real estate investment but with improved liquidity, market observers said at a recent conference.

“I probably give more presentations about this than anything else,” Kevin Gannon, managing director at the investment banking firm Robert A. Stanger & Co. Inc., said of the conversions. He noted that nontraded REITs representing more than $10 billion of capital have approached Stanger with an interest in converting to daily NAV products.

Some say the rise of daily NAV REITs and other deferred-commission products, like T shares, are marginalizing so-called A shares, the traditional, full-commission nontraded REIT product.

“I don’t know when A shares all of a sudden became the bad guy,” Jim Manouse, senior vice president of national accounts at Lodging Opportunity Fund, said at IMN’s Nontraded REIT & Retail Alternative Investment Symposium last week in Dana Point, Calif.

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