Fact vs. Fiction on Nontraded REITs

While most financial inter­mediaries already know that nontraded REITs offer above-average distribution yields, their real performance has his­torically remained a mystery. With the goal of measuring the true per­formance of nontraded REITs, Blue Vault Partners, in collaboration with the Real Estate Finance and Invest­ment Center at The University of Texas at Austin McCombs School of Business, has conducted studies dur­ing the past two years to compare the full-cycle returns of each individual nontraded REIT to its own unique custom benchmark.

Full-cycle events occur when a REIT liquidates its portfolio, completes a listing of its common stock on a public exchange, or is acquired by or merges with another entity. Utilizing the NCREIF Property Index for returns of institutionally owned real estate and the FTSE NAREIT index for the returns of publicly traded REITs, these studies shed light on the real perfor­mance of nontraded REITs and dis­pel myths that have been circu