- March 1, 2019: Vol. 6, Number 3

IPA and Stanger take first step in reporting performance of nonlisted REITs

by Anthony Chereso and Kevin Gannon

As demand for alternatives among Main Street investors continues to grow, the Institute for Portfolio Alternatives (IPA) and Robert A. Stanger & Company, Inc. have teamed up to publish performance data that allows industry professionals to compare the investment returns of nonlisted REITs with the broader traded real estate market and the general stock market. It is important to note that most investors will not earn the returns presented in the IPA/Stanger Monitor because of the effects of the sales load and the timing of individual investments. The IPA/Stanger Monitor advances reporting integrity across the industry by providing clear, transparent and measurable performance metrics to help financial professionals and their clients understand the value of nonlisted REITs.

The inaugural issue of the IPA/Stanger Monitor, published January 2019, tracks the performance of 56 nonlisted REITs, including seven net-asset-value REITs and 49 Lifecycle REITs.

The study is based on the regularly reported NAV per share of nonlisted REITs, along with distribution and reinvestment information. The IPA/Stanger Monitor converts this data into quarterly, annual and multi-period total return statistics that can be compared to regularly used real estate securities indices. Now, industry participants can size-up the overall performance of nonlisted REITs — consolidated information that was not widely available until now.


NAV REITs conduct continuous publicly-registered offerings of securities that raise funds at NAV (generally appraised value of the real estate plus the book value of other assets and liabilities) and deploy the capital into real estate, subject to mortgage debt. Distributions are generally paid monthly or quarterly, and liquidity comes from the NAV REITs commitment to redeem up to 5 percent of outstanding shares per quarter (20 percent per annum) at NAV. These relatively new NAV REIT vehicles have attracted the sponsorship of some large institutions in the real estate world, including Blackstone, CIM, Starwood, Jones Lang LaSalle, RREEF, Nuveen, Hines, Oaktree, Black Creek and others. Collectively, these programs have raised more than $8 billion of equity capital and show real estate performance over the past three years that exceeds the performance of most major real estate securities indices. The IPA/Stanger Monitor reports a three-year total return from the Stanger NAV REIT Index, a value-weighted index including reinvestment of dividends, of more than 22 percent, without sales load. Comparable indices provided total returns in the range of 6.0 percent to 8.9 percent during the same three-year period.

To be fair, traded REIT performance, which reflects both the performance of the underlying real estate and its management team, also includes the impact of the stock market premiums and discounts that have created some volatile results during the past three years.


The other group of nonlisted REITs covered in the IPA/Stanger Monitor are the traditional Lifecycle REITs. Lifecycle REITs raise capital and invest in real estate with mortgage debt, and generally intend to operate for a five- to seven-year period or more, before seeking a liquidity event in the form of a sale, merger or listing. Liquidity for investors during the holding period is limited, sometimes 5 percent of shares outstanding per annum offered through share repurchase programs funded by dividend reinvestment programs that can be curtailed or terminated by a REIT’s board of directors. Collectively, the 49 Lifecycle REITs included in the Stanger study represent $46.8 billion of equity capital and produced a total return, before sales load, of 18.2 percent over the three years ended Dec. 31, 2018, as measured by the Stanger Lifecycle REIT Index. The total return of the Lifecycle REIT Index over this three-year period also outpaced most major real estate securities indices, as shown on the prior page.

It is also worth noting that both the Stanger NAV REIT Index and the Stanger Lifecycle REIT Index provided total returns (before sales load) that approximate the NCREIF Property Index.


Sales loads, the cost associated with raising capital for a nonlisted REIT, should also be considered. Sales loads vary by program and share class with a range of zero sales load, generally found in the I share (institutional) and D share (wrap account) classes, to almost 10 percent. Offering materials should be closely reviewed prior to recommending or investing in any particular security.


We expect the performance of NAV REITs and Lifecycle REITs to be more closely monitored by research analysts, regulators, investors and asset managers. As more institutional asset managers enter the NAV REIT market, we expect competitive forces to manifest themselves as each program and sponsor seeks to outperform its competitors. While past performance is not indicative of future results, the data is now more easily available to monitor the performance of this alternative real estate investment strategy.


The inaugural issue of the IPA/Stanger Monitor is available on the IPA website at, and future quarterly editions will be available as a subscription.


Anthony Chereso is president and CEO of the Institute for Portfolio Alternatives (IPA), and Kevin Gannon is chairman and CEO of Robert A. Stanger & Company, Inc.

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