2025 has turned into the year of volatility for alternative investments that are often pitched to investors as stable, with the $1.27 billion Inland Real Estate Income Trust Inc. – a nontraded real estate income trust – this month reporting to financial advisors and their clients an estimated net asset value per share decline of 11.9%.
The nontraded REIT’s new estimated NAV is $16.89 per share; that’s in contrast to its most recent published per share NAV as of March 2024 of $19.17.
The Inland Real Estate Income Trust had not published an NAV recently because it was testing the interest of institutional investors who may have had interest in buying the portfolio, said Mark Zalatoris, the company’s president and CEO, in an interview Friday.
“The 2025 tariffs caused difficulties in the market,” Zalatoris said. “Investors in real estate are looking at uncertainty, with higher interest and Treasury rates. We hope long term interest rates come down in 2026.”
Real estate investing, in large part, is dependent on how interest rates are moving; when interest rates increase, the cost of borrowing increases, making real estate investing less profitable.
“This is a good portfolio and we will operate it properly for investors,” he said. “We had to get an NAV out so investors could plan for year-end transactions and hired a third party appraisal group.”
“We may test the market later” regarding a potential sale of the REIT, he added.
The decline in the estimated per share value of the Inland Real Estate Income Trust comes at a time when other alternative funds are seeing values per share take a tumble.
The alternative investment industry has a history nontraded, illiquid funds trading below estimated NAVs once they become public traded companies.
Just this week, the $4.3 billion Bluerock Private Real Estate Fund, formerly an Interval fund with limited buyback opportunities for clients did just that, closing its first day of trading Tuesday at $14.70 per share, according to NYSE.com.
That's a decline of close to 40% from its last published net asset value – NAV - on Friday, December 12, of $24.36.
Last month, the FS Specialty Lending Fund, with $1.9 billion in assets, published on November 4 an NAV of $18.60 per share. After months of preparation, the company began trading 10 days later on the NYSE at $14 per share, a discount to NAV of 24.7%.
Financial advisors often sell clients interval real estate funds or nontraded real estate investment trusts in order to diversify portfolios and deliver steady yields. Real estate funds of all stripes, however, were hit by rising interest rates since the start of 2023. Higher interest rates hurt real estate investors because the cost of capital rises.
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