November 22, 2017 Comments (0) Blog

Non-traded REITs on a Downward Sales Spiral

Non-traded REITs


New regulations put a damper on Non-traded REITs sales

According to an article in Investment News, sales of non-traded real estate investment trusts (REITs) are headed for their worst year since 2002. Sales of non-traded REITs reportedly hit their peak in 2013, when independent broker-dealers sold $19.6 billion of the products. The industry is projected to raise just $4.4 billion in equity in 2017, according to reports.

The Department of Labor’s fiduciary rule and other new regulations have hurt sales of high commission products like non-traded REITs, according to Investment News. Brokers’ commissions have been lowered for products such as mutual funds.

The Financial Industry Regulatory Authority also recently put into place a new rule, known as 15-02, that makes pricing of illiquid securities like nontraded REITs easier to understand for investors.

In the past, client account statements showed illiquid securities like REITs at the value they were bought by the client and did not subtract commissions, which were high.

Compared to traditional investments, non-traded REITs, are considerably more complex and involve a high degree of risk. Unfortunately, many investors were not made adequately aware of the risks and liquidity problems associated with REITs.

Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.

If your broker-dealer fails to adequately disclose risks or make unsuitable investment recommendations, they can be held liable for investment losses.

Free Consultation

The foregoing information, which is all publicly available, is being provided by The White Law Group.

If you have questions or concerns about your purchase of a non-traded REIT, the White Law Group may be able to help you. For a free consultation with a securities attorney, please call (888) 637-5510.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, please visit