More Non-Listed REITs May Begin Listing
04/03/2012 | by Matthew Bechard

More public non-listed REITs are choosing to list in the public markets, and Kenneth Betts, an attorney with Locke Lord, hopes it's the start of a trend.

"We haven't seen much real liquidity events in terms of the listing of non-listed entities since 2007," he said during a video interview at REITWise 2012®: NAREIT's Law, Accounting & Finance Conference in Hollywood, Fla. "So this movement in late 2011 and early 2012 is very exciting for those of us who practice in that area."

Non-listed REITs listing in the public market helps to validate the non-listed investment model and makes the non-listed real estate more attractive to both investors and real estate operators, according to Betts.

"We can list these REITs and give the investors the opportunity to hold on to it and appreciate in a public market, or have a very efficient vehicle for selling it off through the marketplace," Betts said. "So, from my perspective, it's encouraging that this is, in fact, occurring now."

In terms of the Financial Industry Regulatory Authority's (FINRA) impact on public non-listed REITs, Betts said FINRA's objective is to get investors to become more comfortable with the way operators look at their assets. He said that it also gives them a greater sense of security as to the real value of their assets.

Overall, he said he believes FINRA's efforts to reform the regulation of non-listed REITs will have a positive impact on the sector. They will give companies the ability to begin to access list in the public markets, according to Betts.

Betts said quarterly updates as to the real value of their assets have "sensitized" non-listed REIT investors.

He said efforts to improve transparency and reporting should pay dividends for the companies. Additionally, he said that by virtue of those efforts, companies will find the transition to becoming listed is less painful from a public relations perspective and when it comes to valuing of their assets.