Real estate investment trusts (REITs) are a popular option for income-seeking investors, especially in today’s low-interest-rate environment.
Yet the options for high-yield REITs are becoming increasingly limited, as share prices have been steadily rising throughout 2021.
One option that’s overlooked by many retail investors: non-traded REITs. These are REITs that aren’t traded on any major stock exchanges and can’t be purchased through your brokerage app.
What Are Non-Traded REITs? A non-traded REIT is essentially the same as any publicly traded REIT in terms of how they operate. They still have to follow the same rules established by the IRS to qualify as a REIT, including paying out at least 90% of the taxable income to shareholders in the form of dividends.
The main differences between publicly traded and non-traded REITs have to do with SEC regulation. Non-traded REITs don’t have the same disclosure and reporting requirements as publicly traded companies. While this typically means less transparency for investors, it can also mean higher yields, since non-traded REITs have lower compliance expenses.
1st Streit Office, Inc: Streitwise’s offering is for the company’s 1st Streit Office REIT, which has a portfolio of two class A office properties with a list of strong credit tenants including the Panera Bread headquarters.
The REIT’s shares are currently priced based on the company’s net asset value (NAV) at $10.16 per share, with a minimum investment of 500 shares.
The company’s target dividend yield is 8% to 9%, which it has hit every quarter since the REIT’s inception in 2017. The most recently announced dividend equals an annualized rate of 8.4%.
Since non-traded REITs aren’t bought and sold on the open market, Streitwise offers liquidity options after minimum holding periods. Shares have to be held for a minimum of one year, at which point they can be redeemed for 90% of the current NAV. Shares can be redeemed for the full value after five years.
How To Buy Shares Of 1st Streit Office: Investors can purchase shares of the REIT directly through the Streitwise platform, and the offering is available to both accredited and non-accredited investors.
Are Non-Traded REITs A Good Investment? There are definitely pros and cons to investing in non-traded versus publicly traded REITs.
Two of the most important factors to consider when deciding if this is a good investment option for you are the limited reporting requirements and liquidity options.
If you’re comfortable with the amount of information the company provides and plan to keep your money invested for at least five years, then non-traded REITs are definitely worth considering for your portfolio.
See also: Streitwise Review
Photo by Abbe Sublett on Unsplash.
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