Non-Traded REITs: A New Liquidity Lifeline

As featured on WealthManagement.com.

Many financial advisors accept the premise that once their client buys a non-traded REIT, they’re locked in for the long-term. They’ll hold onto that asset for several years.

But then things change. Inflation goes up. The stock market goes down. Banks go bankrupt. The company they work for – the one that never does layoffs – decides it’s the right time to right size.

Liquidity quickly becomes the key to your client weathering these financial headwinds. At once, that long-term asset becomes something they’d like to exit in the short-term, likely through a sponsor-led redemption program.

But a redemption program isn’t a guarantee that investors will be able to exit a fund on their terms. Recent news headlines about the $70 billion Blackstone BREIT and $15 billion Starwood SREIT funds tell the story of investors who have been shut out of redemptions for the past four months. 

In March, BREIT reported meeting just $666 million in requests from shareholders clamoring to redeem their shares early. This left $4.5 billion in withdrawal requests unfulfilled. 

Investors – and their financial advisors – who saw their requests denied, may think the only choice is to try their luck again in the April redemption queue. Fortunately, there’s another option.

LODAS is an online marketplace where your clients can trade alternative investments – including non-traded REITs – similar to how they would a company stock.

The marketplace operates like an exchange where investors can buy when they want to buy and sell when they want to sell. They don’t have to wait for a sponsor’s redemption program to come through. Sellers set the share price they’re willing to accept from another buyer. 

It’s liquidity on demand and on their terms.

Trades in the LODAS marketplace are paperless, potentially executed in a day and settled in as quickly as five days. Start-to-finish, it’s significantly faster than the multi-week process that’s been the standard for these assets. 

There are about 30 active funds on LODASMarkets.com – including BREIT and SREIT. With millions of dollars of institutional buy-side interest, it’s a potential liquidity lifeline for all investors – especially those stuck in a months-long redemption cycle.  

You may not have known that non-traded REITs could be traded. And that’s understandable. After all, “non-traded” is in the name, right?

But as financial headwinds continue to batter financial portfolios, we can only assume that the appetite for liquidity for traditionally long-term assets will continue to increase. Fundraising for non-traded REITs and other alternative investments reached $57 billion in 2022, which is more than triple the amount we saw in 2020. 

Fortunately, LODAS was made for this moment. Talk to your clients about trading their non-traded REITs on LODASMarkets.com. They can potentially achieve the exit, share price and liquidity they want – all on their terms. 

I started my career like many of you – as a financial advisor. I don’t think employing a “fingers-crossed” approach is the best strategy for managing a client’s portfolio. They shouldn’t have to wait it out month-after-month to see if their redemption request is approved.

With LODAS, investors are no longer stuck in limbo. They have a liquidity lifeline. 

Brian King, CEO, LODAS Markets