Non-Traded Reits

A recent study by SLCG concludes that non-traded REIT’s [Real Estate Investment Trusts] should not have been sold to almost any investor.

This is due to the following factors:

  • Non-traded REIT’s charged more than $15 billion in up-front fees;
  • Non-traded REIT’s are fraught with conflicts of interest;
  • Sponsors pay corrupting upfront fees and commissions of approximately 13.2% to induce brokers and advisors to recommend non-traded REIT’s;
  • Non-traded REIT’s sponsors and affiliates have complete power and control of non-traded REIT’s; and
  • Institutional investors almost never invest in non-traded REIT’s therefore there is no ability for shareholder discipline.[1]

Open end real estate mutual funds and closed end traded funds provide exposure to the same market segment with none of the disadvantages of the non-traded REIT’s. The study concludes that advisors and brokers cannot justify the recommendations to purchase a non-traded REIT’s, when their interests can be clearly better served by a low cost mutual fund, or a closed end fund, or an individual REIT managed by folks with incentives to construct a diversified portfolio of the best real estate investments.

For more information and a free consultation about how to recover losses your portfolio suffered due to negligence, misconduct, or investment fraud by a financial advisor or brokerage firm, contact Attorney Howard Rosenfield at (860) 677-4334 or email howardrosenfield@stockbrokerproblems.com.

Attorney Rosenfield is also available to speak on specific subject matter topics related to advisor negligence, misconduct, or investment fraud.

[1] Fiduciary Duty and Non-traded REIT’s available at SLCG.com

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