A recent study by SLCG concludes that non-traded REIT’s [Real Estate Investment Trusts] should not have been sold to almost any investor. This is due to the following factors:
- Non-traded REIT’s charged more than $15 billion in up-front fees;
- Non-traded REIT’s are fraught with conflicts of interest;
- Sponsors pay corrupting upfront fees and commissions of approximately 13.2% to induce brokers and advisors to recommend non-traded REIT’s;
- Non-traded REIT’s sponsors and affiliates have complete power and control of non-traded REIT’s; and
- Institutional investors almost never invest in non-traded REIT’s therefore there is no ability for shareholder discipline.
Open end real estate mutual funds and closed end traded funds provide exposure to the same market segment with none of the disadvantages of the non-traded REIT’s. The study concludes that advisors and brokers cannot justify the recommendations to purchase a non-traded REIT’s, when their interests can be clearly better served by a low cost mutual fund, or a closed end fund, or an individual REIT managed by folks with incentives to construct a diversified portfolio of the best real estate investments.
For more information and a free consultation about how to recover losses your portfolio suffered due to negligence, misconduct, or investment fraud by a financial advisor or brokerage firm, contact Attorney Howard Rosenfield at 860-677-4334 or email firstname.lastname@example.org.
Attorney Rosenfield is also available to speak on specific subject matter topics related to advisor negligence, misconduct, or investment fraud.