We have written often about the large fees associated with non-traded REITs and the challenges these fees create for the overall health and success of non-traded REIT investments. (Non-traded REITs often create fees/commissions of upwards of 15%).
According to reports, Wells Real Estate Funds Inc., one of the most prominent sponsors of non-traded real estate investment trusts, is getting rid of the one of the most heavily criticized fee charged by REITs – the internalization fee.
REIT sponsors over the past 10 years consistently have imposed the charge — commonly referred to as an internalization fee — when the contract between the REIT and its outside adviser expires, with the REIT then acquiring the outside adviser. That charge, which has drawn criticism because it typically isn’t fully disclosed in offering documents and has cost investors in several prominent REITs hundreds of millions of dollars.
The move by Wells is likely in response to the growing dissatisfaction with the fees and commissions charged by REITs. Hopefully the change by Wells REIT is a move toward lower fees for investors in non-traded REITs like Behringer Harvard, KBS REIT, Inland American, Inland Western, Desert Capital, etc. Each of these REITs has suffered large losses over the last few years, in part because of the high fees associated with these products.
The White Law Group continues to file FINRA arbitration claims against the broker-dealers that recommended these REITs in attempts to help investors in these products recover their losses.
For information on these lawsuits and your potential recovery options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on the firm, visit http://www.whitesecuritieslaw.com.