Real estate is one of the oldest means by which individuals have accumulated and measured their wealth. In fact, there was once a time when real estate was considered the more "traditional" investment while stocks and bonds were thought of as “alternatives.” Today there are a number of ways to invest in real estate, and one that has grown exponentially in popularity is the non-traded real estate investment trust, or REIT.
REITs are specialized investments that pool the money of many investors to purchase real estate assets, primarily properties. REITs can focus on one property type, such as office, or include many different kinds of properties in a single portfolio. REITs can also vary in terms of their geographic focus—they can be regional, national or global in scope.
An investor’s return from a REIT investment may come from different sources depending on the REIT’s strategy. Typically, income from rents, minus expenses, is passed through to the REIT and, after paying other expenses of the REIT, is then distributed to shareholders. The REIT may also seek to grow the value of invested capital, providing additional return to investors in the event of a future liquidity event, such as a listing on an exchange, merger, or sale of REIT assets.
Remember that, like real estate, an investment in a non-traded REIT does not offer ready liquidity like you would find with stocks and bonds. Distributions from a REIT are not guaranteed, nor is growth in the value of invested capital. Future liquidity events are also not guaranteed. An investment in a non-traded REIT is subject to significant upfront and ongoing expenses which can reduce the amount available for an investment and reduce an investor's overall return.
Please note: Hines REIT and Hines Global REIT are closed to new investors.