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ocean view 10-22-2017 01:40 PM

non-traded REIT - what to do
 
The former FA got us into a non-traded REIT investment 18 months ago. It is roughly 8% of our portfolio, and in 18 months has increased 5% in value.

Since this is non-traded (and we are estranged from our prior FA) there is little information about what the future holds for this investment other than SEC filings. I can see that they have closed the investment to new investors. They invest in warehouses (Amazon, Home Depot, etc.), by the way, so not as bleak as the shopping mall REITs.

Honestly, I'd like to get out of this investment as I don't really understand it and am nervous about a market downturn. They do have a share redemption option, but at 18 months in, we would take a 7.5% haircut. That decreases to 5% at 2 years of ownership. You can get 100% back only after 4 years.

I've been trying to research exit strategy options on the bogleheads and it sounds like seeking redemption can be a long and slow process. The fund has some complex formula to determine what redemption requests they will approve. Selling on a secondary market seems to cost a lot more than 7.5%.

Do any of you hold non-traded REITs? What happens to the value in a market downturn? Maybe I just need to relax and let this play out. I think it is the not understanding the investment that has me concerned. What would you do?

thanks in advance.

teejayevans 10-22-2017 05:25 PM

First of all, since it's not traded, you don't know that value, take what they say it's worth with a grain of salt.
I would let it ride, get rid of it 4 years from now.

bobandsherry 10-22-2017 05:40 PM

A bit old and stale, but perhaps some insight:
https://www.whitecoatinvestor.com/pr...-traded-reits/

Lots of other discussions to be found as well:
https://www.google.com/search?q=how+...y+traded+reits

OldShooter 10-22-2017 06:27 PM

Contact the brokerage house that the FA worked for, ask to see the compliance officer (assuming you are an older customer, do it in person), tell him that you have discovered that you have been sold an inappropriate investment, one that is illiquid and you don't understand, and ask that they buy it back. Make a few noises about contacting a lawyer, too.

I would first go to https://brokercheck.finra.org/ and check the FA out. He may well have other customer complaints; see how they have been resolved. This is all ammunition for dealing with the compliance guy.

If there is enough money involved to justify it, I'd contact a lawyer specializing in securities law and have him/her make the contact, maybe with a tough letter.

You're a victim here. Demand recompense.

mathjak107 10-23-2017 02:19 AM

Quote:

Originally Posted by ocean view (Post 1953167)
The former FA got us into a non-traded REIT investment 18 months ago. It is roughly 8% of our portfolio, and in 18 months has increased 5% in value.

Since this is non-traded (and we are estranged from our prior FA) there is little information about what the future holds for this investment other than SEC filings. I can see that they have closed the investment to new investors. They invest in warehouses (Amazon, Home Depot, etc.), by the way, so not as bleak as the shopping mall REITs.

Honestly, I'd like to get out of this investment as I don't really understand it and am nervous about a market downturn. They do have a share redemption option, but at 18 months in, we would take a 7.5% haircut. That decreases to 5% at 2 years of ownership. You can get 100% back only after 4 years.

I've been trying to research exit strategy options on the bogleheads and it sounds like seeking redemption can be a long and slow process. The fund has some complex formula to determine what redemption requests they will approve. Selling on a secondary market seems to cost a lot more than 7.5%.

Do any of you hold non-traded REITs? What happens to the value in a market downturn? Maybe I just need to relax and let this play out. I think it is the not understanding the investment that has me concerned. What would you do?

thanks in advance.

the value only comes in to play and is known when the reit is sold . i had owned the apple reits at one time before they went public. on the secondary market they were going for 3 bucks even though we paid 11.

when it finally went public it was at about 10 or so . it really sucked as an investment . but there really was no getting out .


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