Nontraded REITs Have Raised Over $20B This Year And Are Shifting CRE Market Dynamics
October 6, 2021 | John Banister
Tens of billions of dollars are being raised this year by some of the biggest investment firms in real estate into nontraded REITs, a rapidly growing segment of funds that are shifting the dynamics of the industry’s hottest property sectors.
The money pouring into these nontraded REIT funds, managed by investment giants such as Blackstone and Starwood, could be leveraged to create up to $100B in buying power just from the capital raised this year.
The funds are largely targeting multifamily and industrial assets, pushing up pricing in those already competitive sectors, and the way the funds are structured could lead to a major shift in the markets.
Nontraded REITs are perpetual investment funds, meaning they don’t have the same pressure to sell assets as traditional equity funds with finite lives. Some industry leaders think nontraded REITs will hold properties for longer time periods, creating a shortage of assets on the market for sale and reducing the frequency of trading in the sectors.
