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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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Second Annual Blue Vault Broker Dealer Educational Summit 2016
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The Blue Vault Summit could not have been more perfectly timed. This gathering of the Broker Dealer and Sponsor communities provided insightful and open discussion from several vantage points. These conversations are paramount, especially in a time of significant regulatory change.