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Nontraded REIT sales dry up in Q1


M&A rebound sparks optimism for near-term deal activity


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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

Nontraded REIT sales dry up in Q1

NontradedREIT sales figures slowedto a trickle in the 2016 first quarter and two typical powerhouses in the salesarena were absent from the top-sponsors ranking, the latest quarterly data fromRobert A. Stanger & Co. Inc. showed.

Together,nontraded REIT sponsors logged a little more than $1.40 billion in sales duringthe quarter, with the top five sponsors during the period accounting for about 57.5%of the total.

To besure, observers expect 2016 sales figures overall to be low, with now out of the picture andnew regulations intendedto boost broker/dealer fee transparency in play. On April 11, FINRA Regulatory Notice15-02, which requires broker/dealers to disclose up front the true value of shares,incorporating fees, went into effect.

"Themost recent quarter of $1.4 billion of fundraising in the Non Traded REIT spaceis a low not seen since Q1 [of] 2009 in part reflecting a much lower level of liquidityevents in the space and the transition to deferred commission products such as dailyNAV REITs and T shares in response to FINRA Rule 15-02," Kevin Gannon, managingdirector at Robert A. Stanger & Co., said in an email.

In January,Gannon had projected $7 billion to $8 billion of nontraded REIT sales in 2016. Hereiterated that projection in his email.

"Stangeris projecting fundraising for the Non Traded REIT space to be in the range of $7.0billion to $8.0 billion for 2016 with Interval Funds focused on real estate investmentslikely garnering $1.5 billion or more," he said.

Observershad predicted other sponsors would pick up the slack in the market created by AmericanRealty Capital's departurefrom the space. Griffin CapitalCorp., the top sponsor by a landslide in 2015, was notably absent fromthe first-quarter ranking, however.

Afterthe first quarter, the top five list had some new names. emerged as the top sponsor after the first three months of the year, with $199.2million of sales, representing a 14.2% market share.

SteadfastREIT Investments LLC took second place in the first-quarter ranking, with $178.6million of sales, representing a 12.7% market share, followed by in thirdplace, with $157.0 million in sales, reflecting an 11.2% market share.

Cole Capital Corp.,the nontraded REIT sponsor owned by VEREITInc., climbed back into the top-sponsor ranking with $144.2 millionof sales — a 10.3% market share. The firm had suffered a crisis of confidence andcompromised relationships with broker/dealers in 2015 as a result of the falloutof the accounting scandal at American Realty Capital Properties, the previous incarnationof its owner.

"Cole … continues to add new selling agreements furtherdiversifying its selling base," a company spokesman said in an email. "Thecompany has been working with advisers in preparation for [FINRA Regulatory Notice]15-02, and is poised once again to be a leader as the industry continues to evolve."

Industrial PropertyTrust Inc. was the top nontraded REIT real estate program at the closeof the first quarter, having raised $190.6 million in sales, representing a 13.6%market share.

Steadfast ApartmentREIT Inc. and Carey WatermarkInvestors 2 Inc. took second place and third place, respectively, inthe top real estate program rankings.