REITs – Publicly Registered Non-Traded vs. Exchange Traded

Understanding Real Estate Investment Trusts (REITs)

Many investors have heard of real estate investment trusts (REITs), but what is the difference between a publicly registered non-trade REIT vs. an exchanged traded REIT?

A key difference lies in the illiquid nature of the non-traded REIT. These investments do not trade on a national securities exchange and are therefore often illiquid for long periods of time, often eight years or more. If you invest in such a vehicle, you may find it difficult to redeem your shares early. You may find that the fees are high and erode the total return. Returns of non-traded REITs are often heavily subsidized by borrowed funds, unlike exchange-trated REITs, which typically derive their returns soley from earnings.

For more information on this topic, visit the Financial Industry Regulatory Industry (FINRA) page regarding REITs.

This information is general and not intended as legal or investment advice. For counsel regarding your specific investment situation, talk to an experienced lawyer. You can contact the Boca Raton law offices of Russell L. Forkey, P.A. by telephone at 561-406-4644 or online by filling out a brief contact form.