We review non-traded REIT positions from holders whose repurchase requests are capped, prorated or suspended, and who want a negotiated sale instead.
Confidential review. Direct buyer. Transfer handled through closing.
Positions of $100,000 and above
Direct, principal-led, and confidential.
We are a principal-led buyer that reviews non-traded REIT positions directly from holders who need liquidity outside the sponsor's repurchase program. We work within the REIT's transfer procedures, work with your custodian's process for IRA-held shares, and handle documentation through to closing. Minimum $100,000.
Every position reviewed individually.
Direct decision-making.
Coverage across all 50 states.
Each position submitted is reviewed individually, with direct decision-making by a principal.
Where a position fits our focus, we provide a non-binding indication of interest.
If terms are agreed, we handle transfer documentation through to closing.
What a secondary buyer looks at, and what you should.
A non-traded REIT's repurchase program is a queue, not an exit. If you need the money on your schedule rather than the sponsor's, you have four options, and each one costs something.
A non-traded REIT is registered with the SEC but not listed on an exchange. In the SEC's words, the shares "cannot be sold readily in the market." There is no screen price. The value on your account statement is an estimate, and the same bulletin notes that share valuations rest on periodic or annual appraisals that "may not be accurate or timely."
FINRA's rules govern the per-share value a broker shows on your statement. Under the amendments described in Regulatory Notice 15-02, effective April 11, 2016, a value based on the net investment method can be used only until 150 days after the second anniversary of the REIT breaking escrow in its public offering. After that, the value comes from an appraisal performed at least annually with the help of a third-party valuation expert. It is an estimate, not a price anyone has agreed to pay.
Most non-traded REITs offer to buy back shares. The SEC says these programs are "typically subject to significant limitations" and may be discontinued at the REIT's discretion without notice. One NAV REIT's share repurchase plan, filed with the SEC in 2018, shows how the limits work: repurchases capped at 2% of aggregate NAV per month and 5% per calendar quarter, 95% of the transaction price for shares held less than a year, pro rata treatment once the cap is reached, and a board that may modify, suspend or terminate the plan.
When requests are light, a program like that pays at or near NAV, and no secondary buyer will beat it. Use it. When requests exceed the cap, you get a pro rata share and resubmit the rest next period without knowing how long the line is. If the board suspends the plan, nothing moves.
A listing, a merger or a sale of the portfolio solves the problem for every holder at once. The SEC warns that a listing or liquidation "might not occur until more than 10 years after your investment." If you don't need the money, waiting is a reasonable choice, but the timetable is the sponsor's.
Third parties sometimes make tender offers for non-traded REIT shares. Be careful with the small ones. The SEC describes mini-tenders as offers for less than five percent of a company's shares, and the withdrawal and proration rules that protect holders in larger tender offers do not apply to them. The bidder also does not have to notify the company. The SEC warns that some bidders price below market "hoping that they will catch investors off guard," that you generally cannot change your mind after tendering, and that payment can be delayed "for weeks or months."
Rule 14e-2 requires the company to tell holders, no later than 10 business days after a tender offer is first published or sent, whether it recommends acceptance or rejection, is neutral, or cannot take a position, and why. Because a mini-tender bidder need not notify the company, the SEC has noted the company may not know about the offer and should respond as soon as possible once it does. Ask the REIT for its statement before you tender.
You can also sell the shares directly to a buyer such as us, at a negotiated price and with a closing date you can plan around. The cost is a discount to NAV.
A buyer who pays you today takes your place in the same queue. The discount pays for that wait and for the risk that it runs longer than expected. Three things move it:
If the program is open and filling requests near NAV, use it and keep the difference. A secondary sale makes sense when the program is capped, suspended or slower than you need. Any number we give is a non-binding indication of interest, based on a review of the specific REIT.
The REIT's transfer agent generally keeps the shareholder register, and a sale is recorded there once the sponsor's transfer documents are complete. The charter and the sponsor's procedures decide what those documents are, so we start by reading them.
If the shares are held in an IRA, the IRA owns them, so the custodian generally signs the transfer documents and the proceeds are paid back into the account rather than to you. Custodians have their own forms and timelines; have the custodian's name, the account title and a recent statement ready. In a taxable account the sale is a taxable event, so speak with your tax adviser before you agree a price.
The REIT's name, your share count and class, the most recent statement value, how the shares are held, and whether a repurchase request is pending. We review positions of $100,000 and above. If you hold a DST interest or non-traded BDC shares as well, the same review covers them.
Sources
General information, not tax, legal or investment advice.
Yes, if the REIT's charter and the sponsor's transfer procedures allow it. The sale is a private transaction with a secondary buyer, at a negotiated price that usually sits below the stated NAV. We review positions of $100,000 and above and, where one fits our focus, give a non-binding indication of interest.
The SEC says repurchase programs are typically subject to significant limitations and may be discontinued at the REIT's discretion. One NAV REIT plan filed with the SEC, for example, caps repurchases at 2% of NAV a month and 5% a quarter, prorates requests above the cap, and lets the board modify, suspend or terminate the plan. Your REIT's prospectus sets its own terms.
Compare it with the stated NAV and with your other options first. The SEC warns that mini-tender offers, which seek less than five percent of a company's shares, are sometimes priced below market, generally cannot be withdrawn from once you tender, and may pay late. Rule 14e-2 also requires the REIT to state its position on a tender offer within 10 business days, though a mini-tender bidder does not have to tell the REIT about its offer, so ask whether it has issued a statement.
A buyer starts from the most recent NAV and adjusts for the expected time to the next exit, the quality of the properties and debt, how distributions are funded, and transfer costs. When the repurchase program is open and paying near NAV, it will usually pay more than a secondary buyer.
Generally, yes. The IRA owns the shares, so the custodian signs the transfer documents and the proceeds are paid back into the account. Custodians set their own procedures, so tell us who yours is.
We consider positions with an estimated value of $100,000 or above.
Positions of $100,000 and above, reviewed by a principal.
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