Non-traded real estate investment trusts raised nearly $1.2 billion in investor capital in the third quarter of 2018, according to the latest Non-Listed REIT Market Snapshot issued by research and due diligence firm Summit Investment Research.
Summit noted that perpetual life REITs, a growing trend in the non-traded REIT space, raised approximately 79 percent of the total equity during the quarter, up 2 percent compared to last quarter.
So far in 2018, non-traded REITs have raised $3.3 billion in equity capital, which is on pace to exceed the record low $3.9 billion in 2017. Fundraising for non-traded REITs peaked in 2013 with $20 billion raised.
Blackstone Real Estate Income Trust, which broke escrow in January 2017, continued to dominate the space during the quarter with a 63 percent market share and $773 million raised. Without Blackstone REIT, non-traded REITs raised only $445 million during the third quarter.
Griffin-American Healthcare REIT IV was the second highest fundraiser during the third quarter with $67 million in investor equity, while Cole Real Estate Income Strategy (Daily NAV) and Black Creek Industrial REIT IV tied for third with $50 million raised each.
Black Creek Diversified Property Fund was a close fourth with $49 million raised, while Carter Validus Mission Critical REIT II took the fifth spot with $40 million.
Summit noted that reinvested distributions represent a significant source of equity capital for non-traded REITs. In the third quarter, REITs raised $248 million through their distribution reinvestment programs, which is a sharp decline from $310 million last quarter due to several REITs suspending their DRIP programs.
Share redemptions have remained high over the last two years but declined slightly to $396 million during the quarter. Over the trailing four quarters, REITs redeemed $1.8 billion in equity. While most REITs cap annual share redemptions at 5 percent of outstanding shares, Summit said that many have closed their redemption programs or are hitting their quarterly limits.
Summit Investment Research covers non-traded REITs, business development companies, interval funds, and listed REITs (that acquired non-traded REITs or were once non-traded). The company’s research is utilized by financial advisors, registered investment advisors, broker-dealers, sponsors, service providers such as law firms, due diligence firms, industry organizations, and news organizations, and institutions.