Peter Fass, partner in the New York office of the law firm Proskauer Rose LLP, discussed some of the latest trends and developments in the public, non-listed REIT (PNLR) market in an interview for the latest edition of the NAREIT Podcast.
Fass co-heads Proskauer's real estate capital markets group, which handles all aspects real estate securities transactions. Fass was asked about the increase in PNLR offerings and the drivers behind the growth. Fass said PNLRs appeal to yield-seeking investors.
PNLRs "have been structured to give investors some yield, financial stability, a predictable dividend stream and preservation of capital," he said. "The industry had some very high-profile liquidity events that people noticed, and more money started flowing in."
Fass noted that PNLR liquidity events tend to result in capital recycling within the sector. Roughly 50 percent of that capital returns to PNLRs, according to Fass, which was the case in 2013 and has been the case in the early months of 2014.
Fass discussed the impact of the sector's growth for PNLRs in terms of their scale and market power. PNLRs "have become a force in the real estate industry," according to Fass.
"They're doing larger deals at the table at the same time as listed REITs," he said. "I look at non-listed REITs as one of the few ways where a real estate sponsor can raise blind pool capital."