The vast majority of new capital is going to non-traded REITs operated by the Blackstone Group.
Capital flows into non-traded REITs appear poised to leap higher following what has been a rollercoaster year of fundraising.
The latest industry research from Robert A. Stanger & Co. points to a strong rally in fundraising in December and January that is setting the stage for continued flows throughout 2021. Although fundraising ended the year 8.5 percent below that of 2019 at $10.8 billion, Stanger is forecasting strong momentum that could lift fundraising to $15 billion in 2021.
Fundraising took a hit last spring and summer due to uncertainty on how the pandemic might impact real estate values. Real estate values generally lag broader moves in the economy. In addition, the way that one popular category of non-traded REITs work, NAV (net asset value) REITs, is that shareholders are admitted on a monthly basis with an NAV that is usually derived from the prior month’s valuation. So, someone investing at the end of March, for example, is investing based on an NAV that was established at the end of February. During 2020 “there was concern about whether that was the right valuation in light of how rapidly things were changing at the time,” says Trisha Miller, executive managing director of Robert A. Stanger & Co. and chair emeritus of the Institute for Portfolio Alternatives.