Nuveen jumps into changing nontraded REIT market

Nontraded REIT sales finishing 2017 near a low, though one variety generating new life

Dec 27, 2017 @ 2:15 pm

By Bruce Kelly

Another major money management firm is taking a run in the volatile nontraded real estate investment trust business, with Nuveen last week registering the Nuveen Global Cities REIT Inc. The company, which does not intend to list on an exchange, will provide limited liquidity each month to investors and is seeking to raise $5 billion, according to its filing with the Securities and Exchange Commission.

Such limited liquidity REITs that are not looking to list on an exchange or merge with another REIT, known as perpetual-life REITs, appear to be in vogue with sponsors and managers at the moment.

With nontraded REITs on track to post their worst sales since 2002, one of the few bright spots this year for the beleaguered industry has been the Blackstone Real Estate Income Trust, a perpetual-life REIT that launched this year and posted $1.4 billion in sales through September. That accounted for about one-third of nontraded REIT sales over the first nine months of the year, according to Robert A. Stanger & Co., an investment bank.

While the likes of Blackstone and Nuveen are jumping into the nontraded REIT industry, some long-time sponsors and managers are getting out as sales continue to slide from the peak of 2013. Independent broker-dealers sold $19.6 billion of the products that year.

W.P. Carey Inc., one of the companies instrumental in the evolution of the nontraded real estate investment trust business, said in June it was pulling out of the nontraded REIT market and stopped offering new products. Last month, Vereit Inc., a large listed real estate trust, said it was exiting the nontraded REIT business and selling Cole Capital, another nontraded REIT mainstay, for $120 million in cash and up to another $80 million in fees to be paid over six years based on Cole's future revenue.

"Nuveen Global Cities REIT is a newly organized corporation formed to invest primarily in stabilized, income-oriented commercial real estate located in and around leading cities in the United States, Canada, Europe and the Asia-Pacific region," the company said in a news release. "It intends to qualify as a real estate investment trust for federal income tax purposes."

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