Explore Our
“Off The Wall” Blog

Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.

Non-Traded REITS: Now and in the Future

After reading the latest copy of Blue Vault and participating in a few conference calls last week, I have found that the information I learned at the Public Non Traded REIT convention in December was confirmed: over 80% of Effective Public Non Traded REITS (NTRs) are not covering their dividends.  While I don’t believe this alone is a reason to shy away from seriously considering this asset class, it is a fact that I feel everyone should understand if considering NTRs as an alternative investment.

NTRs offer certain benefits.  For instance, the typical lack of correlation between them and most market indices is attractive for many investors as well as advisors.  There is also a significant difference between NTRs and their brethren, publicly traded REITs.  The main difference is the relatively stable share price of NTRs compared to that of publicly traded REITs.  NTRs change after the issue has closed and the properties have been appraised by an unaffiliated party.  This must be done within 18 months of closing the offering, and then annually thereafter.  Conversely, publicly traded REITs trade on the exchanges and have proven to trade within a wide range of their Net Asset Values (NAV).  In extreme market swings, I have seen publicly traded REITs trade as low as at a 40% discount to NAV as well as a 30% premium.  Currently, publicly traded REITS are trading at about a 15% premium.[1]   Another difference is the significant spread between the dividend yields of NTRs and publicly traded REITs.  The average dividend yield of a public REIT last year was 3.8%, whereas the average dividend yield of NTRs was 6.5%. [2] Compare that to the dividend yield of the S&P 500, currently about 1.9% and you can see why the level of interest in NTRs is on the rise.

To see an example of the increase in popularity of NTRs, one only needs to look back over the last year.  Between 2009 and 2010, the amount of funding for NTRs grew from 6.1 billion to 8.0 billion—a 31% increase.  Compare that to 706 million dollars raised in 2000 and I think it’s fair to say that the last ten years were not really the “lost decade” for the NTR industry.  This is not to say it did not suffer in the last downturn of the economy, but I think it safe to say the industry is not going away. [3]

In looking ahead to the next five years, many are predicting that NTRs could grow to have over 350 billion invested in them over the next 5 years. [4]

Investing in Real Estate Investment Trusts (REITS) involves special risks such as potential illiquidity and may not be suitable for all investors.  There is no assurance that the investment objectives of this program will be attained.

[1-4]Stanger as of Dec2010

Source Data : SEC filings and other publicly available  information






David B. photo

David B. Armstrong, CFA

President & Co-Founder

Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....

Learn more ...


Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

A copy of the Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.

Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Stay up to date!

Subscribe to our “Off the Wall” Blog for articles and videos on all things wealth management, by all members of our Team. Unlike Facebook, we will never share your data with anyone.