During the fourth quarter of 2019, non-traded net asset value real estate investment trusts provided a 1.8 percent total return as measured by the Stanger NAV REIT Total Return Index.
Stanger reported that NAV REITs have produced relatively steady quarterly gains over the last 36 months, aggregating 24.4 percent over the period. The MSCI US REIT Index Gross Total Return, a measure of performance of listed REITS, fell 0.8 percent during the fourth quarter but outperformed the Stanger NAV REIT Total Return Index over the three-year period, posting a 26.2 percent total return.
The Cohen & Steers Realty Majors Portfolio Index, a select portfolio of 30 large capitalization REITs considered dominant in their property sectors, recorded a 1.7 percent loss in fourth-quarter 2019, but surpassed NAV REIT performance over the last 36 months. As the market for listed REITs improved in 2019, the RMP 3-year total return climbed to 29.8 percent.
Stanger noted that listed REITs have experienced a bumpy rise over the last 3 years, with total returns frequently swinging by as much as ±10 percent from quarter to quarter.
“This performance only serves to highlight the benefits of a non-listed REIT vehicle, providing a real estate-based return without the ongoing volatility of the traded market,” said Kevin Gannon, chairman and CEO of Stanger.
The IPA/Stanger Monitor also tracks the individual performance data of 59 non-traded REITs, with a combined market capitalization of more than $56 billion, and 16 non-traded business development companies, with a combined market capitalization of $10 billion.
The Stanger NAV REIT and Stanger Lifecycle REIT Total Return Indices measure the performance of non-traded REITs on a quarterly basis.
All NAV REITs with a minimum of one calendar quarter of performance are included in the NAV REIT Index. Lifecycle REITs are added to the Lifecycle REIT Index in the quarter that their first NAV is announced. Lifecycle REITs are removed from the index upon listing, merger, or in the case of a liquidation by sale of properties, upon conversion to a liquidation basis of accounting.
The indices currently include 11 NAV REITs with a total of 59 separate share classes, and 50 lifecycle REITs with a total of 81 separate share classes.
Robert A. Stanger & Co is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts and real estate advisory and management companies in support of strategic planning, capital formation and financings, mergers, acquisitions, reorganizations and consolidations.
Stanger’s publications include The Stanger Report, a newsletter focused on direct participation program and non-traded REIT investing; The Stanger Market Pulse, focused on public direct participation programs, non-traded REIT and non-traded BDC sales; The IPA/Stanger Monitor, focusing on non-traded REIT performance, The Stanger Interval Fund Report, focusing on non-traded interval fund investing, and The Stanger Digest, a newsletter providing a weekly update on industry activities.