Even as publicly-traded equity REITs struggled to shake off negative returns amid stock market volatility, their non-listed peers pulled off a year of both positive performance and strong fundraising.
Non-listed REITs appear to be regaining fundraising momentum as investors look to increase allocations to alternative assets. According to data from Robert A. Stanger, non-listed REITs raised $4.6 billion in 2018. Although that still pales in comparison to the market peak in 2013 when fundraising for the sector reached nearly $20 billion, it is a notable return to a positive trajectory with a year-over-year increase of 9.5 percent.
Another component that is critical to that fundraising growth is performance, adds Chereso. The Stanger NAV REIT Total Return Index showed 2018 returns of 7.35 percent, which trounced the negative annual returns posted by other indexes, including the S&P 500, Dow Jones Industrial and Nareit Equity REIT Index. “We have a really good story to tell, especially compared to our publicly traded counterparts,” he says.
“I think the increase is driven by structural changes in our offerings and the positive response from investors,” says Mark Goldberg, CEO of Griffin Capital Securities. The number of financial advisors who are using non-listed products to gain exposure to real estate is also on the rise. “There is a strong desire to combine direct ownership of real estate with ownership of traded REITs,” adds Goldberg.