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BlueVault Refutes Non-Traded REIT Negativity

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BlueVault Partners, LLC published a blog post yesterday, “Separating Fact from Fiction: A Rebuttal to Recent Articles Regarding Nontraded REIT Performance”, which responds to the many negative articles about non-traded REITs that have recently been circulating. BlueVault provides research to increase the awareness and transparency of public, non-traded REITs and BDCs.

The post cites the Wall Street Journal article titled, “Nontraded REITs are Hot, But Have Plenty of Critics” as well as online blog posts by the Securities Litigation & Consulting Group as offenders in presenting a biased view of non-traded REITs.

BlueVault argues that the research does not reference reasonable and truly comparable data for comparative purposes. In particular, BlueVault scorns the practice of comparing non-traded REITs to a single index and using that information to state that investors have “lost” value.

In the post, BlueVault also maintains that the results presented in the arguments are not necessarily complete or they focus on a particularly poor example. BlueVault states, “By shining the spotlight on one underperforming example, the authors are biasing readers to conclude that all nontraded REIT investments are poor choices compared to one real estate index.” The blog post goes on to provide additional data from a study conducted by BlueVault Partners.

In addition, BlueVault argues that the critics do not take into account the reasons that non-traded REITs are an attractive investment for some portfolios. The two characteristics that BlueVault points to are distribution yields and lack of return correlations with other asset classes.

To read BlueVault’s blog post, click here.