Regulators considering new rules to protect REIT investors

Guidelines would rein in risks associated with non-traded real estate investment trusts

TRD New York /
Aug.August 27, 2014 02:10 PM

Non-traded real estate investment trusts could soon face higher regulatory hurdles.

The North American Securities Administrators Association is preparing to introduce guidelines that would place new limits on how non-traded REITs raise money and distribute dividends. The guidelines, if adopted, would also expose independent brokerages that market the REITs to enforcement actions. Last year, investment in non-traded REITs soared to $19.6 billion as investors were attracted by high dividends and stable share prices. The regulators’ guidelines aim to rein in risks associated with those returns.

One of 33 guidelines under consideration would prohibit or limit non-traded REITs from paying dividends out of investor money, rather than from returns on real estate assets under management, the Wall Street Journal reported.

Another would standardize across all 50 states the percentage of an individual investor’s net worth that can be invested in non-traded REITs.

The Journal points to the case of F. Jay Shields, who has taken legal action against the New York brokers who advised his late father to place 45 percent of his investible assets in a non-traded REIT that listed at a discount when it went public as Columbia Property Trust last year. The Shields estate lost about $75,000 in the process. [WSJ]Tom DiChristopher


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Matt Borstein, Deutsche Bank’s global head of CRE, is moving to Oak Hill Advisors (Photo via Deutsche Bank)

Deutsche Bank’s CRE head moves to Oak Hill Advisors

Deutsche Bank’s CRE head moves to Oak Hill Advisors
Bank OZK CEO George Gleason (Unsplash; Bank OZK)

Bank OZK’s lending up in third quarter

Bank OZK’s lending up in third quarter
WeWork CEO Sandeep Mathrani (Wikipedia Commons; iStock)

WeWork bonds, already junk, downgraded by Fitch

WeWork bonds, already junk, downgraded by Fitch
(Getty, iStock)

Cash-strapped borrowers are increasingly giving keys back to lenders

Cash-strapped borrowers are increasingly giving keys back to lenders
Craig Solomon

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism
529 Fifth Avenue and Silverstein Properties' Larry Silverstein (Google Maps; Getty)

Silverstein gets $171M refi for 529 Fifth Avenue

Silverstein gets $171M refi for 529 Fifth Avenue
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...