A firm established last year to look at nontraded REITs, Blue Vault Partners, LLC, has published its 2010 first quarter review, which RetailTraffic overviewed. Not surprisingly, nontraded REITs are expected to raise 17% more in 2010 than in 2009, or about $7 billion. Due to the quick and reasonable liquid access to real estate ownership with professional management, REITs have done very well this year. So well, in fact, an investor with who we are negotiating on a deal actually brought up that he could get over a 10% yield with a nontraded REIT.
But therein lies the problem - that's not sustainable. The fees and overhead costs of running multi-billion dollar REITs can be significant and these REITs don't tend to use a lot of leverage. As the report points out, the median yield is only about 6.5%, which makes sense in our experience. For deals we've seen this year, at least with the health care REITs, the yields being sought range anywhere from 7.5% to 10% or 11%. Once salaries, overhead, fees, etc. are tacked on, how many hundreds of basis points are eaten? The other issue with investing in a REIT is limited use of leverage. The REITs that are still raising money have effective leverage of only 30%, according to the report. The REITs closed for the year at least have a leverage ratio of nearly 60%, but only about a third of REITs are closed. Though the market got leverage-drunk and is learning many lessons, 30% is way to low to generate a +10% yield on most investments.
2 comments:
I'm not surprised that a Cole REIT was listed as the top five, for both effective and closed. This first quarter Cole has already acquired nearly $4 million in real estate. Hopefully this year will be even better than last year for Cole and the other non traded REITs.
Loan Opportunity Offered By Mr, Pedro That Save My Family From Financial Bondage
Hello Everyone, I am Putri Adiratnaa single mom from Jakarta, I would like to share this great testimony on how I got a loan from Mr, Pedro, when we were driven out of our home when I couldn't pay my bills anymore, After being scammed by various companies online and denied a loan from my bank and some other credit union I visited. My children were taken by foster care, I was all alone in the street. The day I shamefully walked into an old school mate who introduced me to Daisy Maureen. At first I told her that I am not ready to take any risk of requesting a loan online anymore, but she assured me that I will receive my loan from them. On second thought, due to my homelessness I had to take a trial and applied for the loan, luckily for me I received a loan of $80,000.00 from Mr, Pedro. I'm happy I took the risk and applied for the loan. My kids have been given back to me and now I own a home and a business of my own. All thanks and gratitude goes to the help of Mr, Pedro for giving me a meaning to life when I had lost all hope. If you are currently seeking loan assistance, you can contact them via: { pedroloanss@gmail.com WhatsApp+1 863 231 0632 }
Post a Comment