Minimum Investment Amount
Registered Funds Eligibility
Target Annual Net Return *
Cash Distribution Yield
Current Unit Price**
*Past performance is not indicative of future performance. Always review the offering documents and seek professional financial or tax advice before investing.
**A comparison of the Private REIT offerings in Fundscraper’s Marketplace as of September 1, 2022.
How your money will make money.
A real estate investment trust, or REIT, is a company that makes investments in income-producing real estate.
Investors who want to access real estate can, in turn, buy units of a REIT and through that share ownership effectively add the real estate owned by the REIT to their investment portfolios. Unitholders are taxed upon receipt of distribution.
Once a fund successfully qualifies as a REIT, investors can buy shares in a variety of ways. The REIT pools this capitalization to make investments in different kinds of real estate investments. Investments can include the REIT’s direct ownership of real estate, real estate loans, or both.
REITs can be classified in 3 ways:
As with a mutual fund, each share of a REIT represents partial ownership of all the individual assets held by the fund. Therefore, any change in the value and price of a REIT’s shares reflects the change in the value of the overall collection of individual real estate properties the REIT holds. Also like a mutual fund, REITs are professionally managed by one or more fund managers, who determine and implement the REIT’s investment strategy.
Just as REITs can earn returns in the form of income or appreciation, REIT investors can also realize the same types of returns. For income-generating investments, REIT investors typically realize returns through dividend distributions, which represent the income earned by individual real estate properties. Dividend distributions are typically paid to investors by the REIT in proportion to their share of ownership of the entire fund on a regular basis.
Meanwhile, in order to realize appreciation-based returns, an investor generally must sell his or her REIT shares. Unlike income, which can be distributed to an investor on a regular basis, appreciation is generally realized upon sale of shares in a single, lump sum return. That said, when a REIT sells an underlying property, capital gain dividends can be distributed to investors without requiring those investors to divest of their shares. Typically, any appreciation realized in this way by an investor on an equity investment (REITs included) is categorized as a capital gain.
Fees to hold your units will vary by issuer, but may include account opening fees (in the case of registered funds accounts), issuer’s management fees and operating fees, and sometimes a percentage of profits in the form of a promoted interest or performance based fees. We recommend investors review in detail the offering memorandums of each individual offering to see a more comprehensive listing of fees. However, any projected returns shown are net of management fees charged by the issuer.
Typically $10,000 – $25,000; private REITs that are designed for institutional investors generally require a much higher minimum investment. However, click to view the detailed offerings to see the specific minimum investment applicable for each offering.
Private REITs are sold to investors through specialized dealers in the exempt market like Fundscraper. Private REITs are not traded on a stock exchange, so there are transfer, redemption, and resale restrictions on those units. Thus, private investments are not as liquid as publicly traded investments.
These are the basics about why certain investors prefer private REITs to public REITs.
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