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Non-Traded REIT Valuation Made Simple

Non-Traded or Non-Public REITs, like regular real estate investment trusts (REITs), own income-producing real estate, have investors, are registered with the SEC, and make filings. Unlike publicly traded REITs, they are not listed on a public exchange, and this makes the value of their shares and the performance of shareholders’ investments in them difficult to discern. As of April 11, 2016, FINRA’s Regulatory Notice 15-02 has sought to make the value of Non-Traded REITs more transparent for shareholders. Like any regulation, 15-02 has had blowback.

Impact of Regulatory Notice 15-02

To date, 15-02 has complicated Non-Traded REIT sponsors’ product offerings, altered how they compensate advisors, and in some cases necessitated the use of third-party appraisers. Furthermore, it has given broker-dealers new fiduciary responsibilities that put them in the unfamiliar role of educators to the investing public.

Real Estate Valuation and Non-Traded REITs

As one of the largest independent full-service valuation consulting firms in the nation, Marshall & Stevens has valuation experts for everything from real estate and equipment to businesses, intangible assets, structured finance and renewable energy.

Following Regulatory Notice 15-02’s effective date in April, the Real Estate Valuation team at Marshall & Stevens has provided Net Asset Value (NAV) opinions on various Non-Traded REITs, in full compliance with IPA Guidelines and satisfying all FINRA and SEC regulations.

Our in-house Non-Traded REIT valuation expert Patrick T. Craig, MAI, MRICS has also spoken publically about different valuation methodologies for Non-Traded REITs and explained to investors what to expect from Non-Traded REITs when they execute a liquidity event. Earlier this year, Mr. Craig moderated two panels discussing how 15-02 would impact Non-Traded REIT sponsors, broker-dealers, and advisors at the Alternative & Direct Investment Securities Association’s (ASISA) Spring Symposium.

Marshall & Stevens’ Multi-disciplinary Approach

Our Real Estate Valuation team works in coordination with our Structured Finance / Leasing, Machinery and Equipment Valuation, and Financial Valuation teams to provide clients with the best analyses of their assets, both tangible and intangible. This multi-disciplinary approach has made us a top choice for lenders, banks, financial institutions and public and private companies across the globe since our founding in 1932.

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