Robert A. Stanger & Co. and the Institute for Portfolio Alternatives have launched the IPA/Stanger Monitor, a new report that tracks the total return of 58 non-traded REITs, including seven NAV REITs, with a combined market capitalization of more than $49.5 billion.
“We are pleased to apply Stanger’s deep knowledge and experience in the industry to create another valuable publication that is useful to the REIT boards of directors and sponsors that Stanger services,” said Kevin Gannon, president and CEO of Stanger. “However, we also see the data being very valuable to due diligence officers and retail brokers and investment advisers in sizing up the industry and making more informed decisions about products they use in their practices. This data will add to discussions about different liquidity features across products and the weighting of non-listed versus listed products in investor portfolios. Brokers and advisers should keep in mind, however, that the data is presented without sales loads, which should always be considered in analyzing any given product and its appropriateness for any given investor. Performance and comparative performance are only one part of the analysis, though a valuable data point.”
According to the report, The Stanger NAV REIT Total Return Index and The Stanger Lifecycle REIT Total Return Index showed cumulative returns (distributions and capital appreciation) of 22.2 percent and 18.2 percent, respectively, for the three years ended December 31, 2018.
Additionally, each of The Stanger REIT Total Return Indices outperformed returns from the MSCI US REIT Index – Gross Total Return (8.9 percent), the Cohen & Steers Realty Majors Portfolio Index (8.2 percent), the Wilshire US REIT Index – Total Return (6.3 percent), and the Dow Jones US Select REIT Total Return Index (6.0 percent) for the same period. Click here to review the report in its entirety.
For 2018 alone, the Stanger NAV REIT Total Return Index demonstrated returns of 7.35 percent, compared to -3.48 percent from the Dow and -4.57 percent from the MSCI U.S. REIT Index.
For the fourth quarter of 2018, REIT fundraising and sales were strong, with a 10 percent year-over-year increase on REIT sales, after hitting a low of $794 million raised in third quarter 2017.
Blackstone Real Estate Income Trust, a NAV REIT, continued to dominate the space capturing more than 60 percent of the market after raising $4.7 billion since its September 2017 launch, including $2.9 billion in 2018 alone.
The top three NAV REITs based on the share class generating the highest annualized total return include Hines Global Income Trust Inc. (Class AX shares), with a return of 10.85 percent in one year, 12.51 percent in two years, and 10.88 percent in three years. Blackstone REIT (Class I shares) came in second with an 8.33 percent return in one year and a 9.48 percent return in two years. Third place went to Jones Lang LaSalle Income Property Trust (Class M-I shares) had a return of 8.27 percent in one year, 8.36 percent return in two years, and 7.21 percent return in three years. Total returns are calculated without sales load and with reinvestment where a DRIP is available.
The top performing non-traded REIT based on the share class generating the highest total return was Industrial Property Trust Inc. (Class A shares) with an annualized total return of 16.64 percent in the first year, 18.64 percent in the second year, and 16.14 percent in the third year. Inland Residential Properties Trust (Class T shares) came in second with an annualized return of 12.63 percent in the first year, 9.17 percent in the second year, and 7.66 percent in the third year. KBS Strategic Opportunity REIT rounded out the top three with a 12.29 percent return in the first year, 8.05 percent in the second year, and 9.75 percent in the third year.
The Institute for Portfolio Alternatives is a trade organization that seeks to raise awareness of non-traded alternative direct investments (which it refers to as portfolio diversifying investment (PDI) products) among stakeholders and market participants, including: investment advisors, public policymakers and the investing public. It supports increased access to investment strategies with low correlation to the equity markets: non-traded real estate investment trusts (which the IPA calls “Lifecycle REITs”), net asset value REITs (NAV REITs), business development companies (BDCs), interval funds and direct participation programs (DPPs).
Robert A. Stanger & Co. is an investment banking firm specializing in providing strategic planning, 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 and execution, capital formation and financings, mergers, acquisitions, reorganizations and consolidations. Stanger’s publications include The Stanger Report, a newsletter focused on direct participation programs and non-traded REIT investing; The Stanger Market Pulse, focused on public DPP, non-traded REIT and BDC sales; The Stanger Interval Fund Report, focused on non-traded interval fund investing, and the Stanger Digest, a newsletter providing a weekly update on industry activities.