Non-Traded REIT Values Hold Steady During 2012 Indicating Their Previously Declining Values May Have Hit Bottom

Thursday, December 27, 2012 08:33
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Non-Traded REIT Values Hold Steady During 2012 Indicating Their Previously Declining Values May Have Hit Bottom

Tags: alternative investments | profitability | real estate

Prices of non-traded real estate investment trusts (REITs) held steady during 2012, seeing estimated values either drop or increase only slightly over the course of the year.

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As their names indicate, non-traded REITs have no market through which their prices are set.
 
They are usually sold by independent broker-dealers at $10 per share and a REIT’s board must approve a new estimated value 18 months after the last shares have been sold.
 
The past seven years have seen substantial erosion in estimated values for non-traded REITs and there have been stories in the media about their risks and how the declines have affected investors who may not have been sufficiently aware of those risks.
 
The stability in estimated values during 2012 seem to indicate that values have hit bottom. Many of those suffering the worst declines have been large REITs.
 
But not all have experienced the value erosion reflected by the bulk of the market. KBS Real Estate Investment Trust announced to shareholders in December that its value would increase 2 cents per share in December.

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