Many investment professionals assume that it is better to invest in nontraded REITS later in their fundraising period rather than earlier. The recent study of full-cycle events by nontraded REITs performed by Blue Vault and the University of Texas McCombs School of Business The University of Texas at Austin, casts doubt on that assumption.

When recommending and choosing nontraded REITs for their clients, most advisors know the importance of looking at key metrics such as debt, distribution yield, MFFO payout ratios, and portfolio diversification. However, these metrics may vary greatly from REIT to REIT depending on where each program is in its life cycle.

In the recent study prepared in collaboration with The University of Texas called, “Nontraded REIT Industry Full-Cycle Performance Study” in addition to analyzing the total returns of the 17 nontraded REITs that went full-cycle between 1990 and March 2012, the findings also provided insights into what we might call “Timing versus Selection.”