Publicly Traded REITs vs. Non-Traded REITs – Some Differences

Many REITs (whether equity or mortgage) are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly traded REITs. In addition, there are REITs that are registered with the SEC, but are not publicly traded. These are known as non-traded REITs (also known as non-exchange traded REITs).

The purpose of this post is to provide the reader with certain general information and comments relative thereto. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. Thus, it should not be relied upon as providing legal or investment advice. In you have any questions relative to the subject matter here, you should contact a qualified professional.

There are significant differences between publicly traded and non-traded REITs. The specific differences are beyond this parameters of this post. However, a few examples are:

• publicly traded REITs file reports with the SEC and their shares are traded on national stock exchanges.
• non-traded REITs file reports with the SEC but their shares are not traded on national stock exchanges.
• publicly traded REITs Shares are listed and traded, like any publicly traded stock,
  on major stock exchanges. Most are NYSE listed.
• non-traded REITs Shares are not traded on public stock exchanges. Redemption programs for shares vary by company and are typically very limited. Investors may have to wait to receive a return of their capital until the company decides to engage in a transaction such as the listing of the shares on an exchange or a liquidation of the company’s assets.
• publicly traded REITs have the same transactional costs associated with their purchase and sale as do common stocks.
• non-traded REITs usually carry commission charges of anywhere between 8 to 10% of the investment in addition to other upfront offering costs. Ongoing acquisition and management fees and other expenses are also typical. Back-end fees may also be charged.

Before investing in a REIT, make sure that you understand not only the fees charged but all other material aspects of the transaction. Because of the unique characteristics of these types of investment, they are not for everyone.