Guide to Public Non-Listed REITs (PNLRs)

Public non-listed REITs (PNLRs) register with the the Securities and Exchange Commission (SEC), but they do not trade on major securities exchanges. PNLRs operate like listed REITs in nearly every other way, but they typically face redemption restrictions that limit their liquidity.

Like stock exchange-listed REITs, public non-listed REITs, or PNLRs, own, operate and/or finance real estate and are subject to the same IRS rules. In addition, PNLRs are required to make regular SEC disclosures, including quarterly and yearly financial reports. All of these PNLR filings are publicly available through the SEC’s EDGAR database

PNLRs do not offer the same liquidity that stock-exchange listed REITs provide. Redemption programs for shares vary by company and are limited. Generally a minimum holding period for PNLR investment exists.

Nareit and its Public Non-Listed REIT Council monitor and comment on regulatory issues that impact the Public Non-Listed REIT space. Information on those issues can be found here.

Overview
REITs that are registered with the SEC but whose shares intentionally do not trade on a national securities exchange. Offerings are subject to review by state securities regulators, commonly referred to as “Blue Sky” review.

Liquidity
Shares are intentionally not listed on national securities exchange. Liquidity options vary and may take the form of share repurchase programs or secondary marketplace transactions, but are generally limited. Certain “Daily Net Asset Value (NAV) REITs” may provide enhanced liquidity by offering periodic, e.g., daily (or less frequent) repurchase options at net asset value. Traditionally, public non-listed REITs have aimed at providing liquidity through an event such as listing on a national securities exchange, selling all or substantially all its assets, or entering into a merger or business combination.

Transaction Costs
Brokerage costs vary by company and may include up-front commissions and/or trail fees. 

Management
Typically externally advised and managed.

Minimum Investment Amount
Typically $1,000 - $2,500 initial investment.

Independent Directors
Subject to state “Blue Sky” securities regulations that generally follow the North American Securities Administrators Association (NASAA) Statement of Policy Regarding Real Estate Investment Trusts, which recommends that boards consist of a majority of independent directors and that a majority of each board committee consist of independent directors.

Investor Control
Investors re-elect directors.

Corporate Governance
Subject to the same state law corporate law provisions as Stock Exchange-listed REITs as well as state securities laws and regulations which generally follow the North American Securities Administrators Association (NASAA) Statement of Policy Regarding Real Estate Investment Trusts.

Disclosure Obligation
Required to make regular financial disclosures including quarterly unaudited and annual audited financial results under the Securities Exchange Act of 1934, including 10-Qs, 10-Ks, 8-Ks and proxy statements. Pursuant to FINRA Notice 15-02, Financial Industry Regulatory Authority (FINRA) rules require additional broker-dealer disclosure of valuation methodology.

Performance Measurement
FINRA rules require that investors be furnished with per share estimates pursuant to specified timeframe. Independent publications track activities and results  of public non-listed REITs.

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