Learn
A little clarity for your next decision.
Loading your learning library…
Investor WorkspaceWelcome, there!Log Out
Investor WorkspaceA little clarity for your next decision.
By Jerry Baker
Exchange-listed REITs let investors sell shares through a market, while public non-traded REITs generally offer much more limited ways to get cash out. Both can be public reporting companies, so “public versus non-traded” is not quite the right distinction. The real choice is how shares are priced, what selling them requires, and whether those terms fit your need for cash.
A public non-traded REIT is registered with the SEC and files public reports, but its shares do not trade on a national stock exchange. An exchange-listed REIT has publicly traded shares. A private REIT is a third category that relies on a registration exemption for its offering. This article compares the first two public structures. [1]
That wording matters. Calling every non-traded REIT “private” can lead you to overlook reports that are available to read. Calling a REIT “public” can lead you to assume you can sell its shares tomorrow. Ask both questions: Is the offering registered, and are these shares listed?
The companies can own similar types of property. They may also have very different portfolios, debt, fees, and management. A useful comparison holds those differences in view instead of treating trading structure as the only source of risk.
I start with a practical question: If you needed part of this money next year, what would you actually do? The answer should describe a process, a price, and a limit. “There is a liquidity program” is only the beginning of that answer.
| Question | Exchange-listed REIT | Public non-traded REIT |
|---|---|---|
| Who typically buys your shares when you exit? | Another market participant | The REIT under a limited repurchase plan, if offered and available |
| How is price determined? | Buy and sell orders in the market | The offering and valuation rules, often using estimated NAV |
| Can you count on the displayed value? | A quote is not a guaranteed execution price | An estimate is not a guaranteed sale price or redemption right |
| What can delay an exit? | Order limits, trading halts, market conditions, and settlement | Request deadlines, capacity limits, unmet conditions, or a suspended plan |
| Can the investment lose money? | Yes | Yes |
| Where do you research it? | Public filings and company reports | Prospectus, supplements, public filings, and plan documents |
This is a framework, not a promise that every listed security has deep trading volume or that every non-traded company offers redemptions. Read the terms of the shares you are considering, including the specific class.
You normally place an order through a brokerage account. A market order seeks execution at the available price. That price can differ from the last trade or the quote on your screen. Large orders can fill in pieces at different prices. A sell limit order sets a minimum acceptable price but may never fill. [2]
Imagine you own 2,000 shares and see a last trade of $25. That suggests a $50,000 position. It does not prove that someone will buy all 2,000 shares from you at $25. The available bids, order size, and market conditions determine the actual outcome.
Listed shares also face trading halts. Exchanges may pause trading when important news is pending or when other conditions call for a halt. Listing provides a market mechanism; it does not provide an unconditional right to sell at every moment. [3]
For most covered U.S. stock trades, standard settlement is one business day after the trade, called T+1. That standard began May 28, 2024. Settlement is separate from execution and from the time your bank receives a transfer. Check your broker's withdrawal rules and any account restrictions. [4]
For example, a normal Monday trade generally settles Tuesday if neither day creates a relevant holiday issue. It does not mean a Friday-night order turns into cash in your checking account Saturday. Plan for market hours, business days, and transfer timing when an expense has a firm due date.
A repurchase plan lets shareholders request that the company buy back shares under stated terms. The plan may have submission dates, holding periods, price adjustments, company-wide limits, and broad rights to change or stop it. A completed request is not necessarily an accepted redemption. [5]
Some companies use monthly requests, while others have different schedules or more limited programs. Some REITs are organized around a later sale, merger, or listing. Others operate on an ongoing basis. Neither a hoped-for transaction nor a regularly scheduled request window guarantees an exit.
Ask what happens to an unfilled request. Does it remain pending, or must you submit it again? Does the next request use a new price? Are some requests given priority? A reference to “the queue” can be misleading if the plan does not carry your request forward.
Read the source of redemption cash too. Property operations, cash reserves, new subscriptions, borrowing, and asset sales have different effects on the company. Cash used to buy departing investors' shares is no longer available for repairs, debt reduction, or new purchases.
Make a short calendar from the plan. Write down the request deadline, the valuation date, the processing date, and the expected payment date. These may be different dates. Add the documents required for your account, such as a signature guarantee or proof of authority for a trust, if the plan calls for them.
Suppose a hypothetical plan requires a complete request by the tenth day of a month for consideration at month-end. Sending a partial form on the ninth day does not necessarily meet the requirement. If the missing item arrives after the cutoff, the request may move to a later period. The actual plan controls; this is only a workflow example.
I would also review the history: how much investors requested, how much the REIT paid, and when it limited payments. SEC staff guidance calls attention to those disclosures. A strong recent record is useful evidence, but it does not change a discretionary plan into a guarantee. [5]
BREIT's report for the quarter ended June 30, 2026 describes monthly and quarterly repurchase limits tied to aggregate NAV. It states limits of 2% monthly and 5% quarterly, using the bases defined in its plan. It also describes board discretion to repurchase less or none, priority exceptions, and a requirement to resubmit unfilled requests. [6]
The same report says it fulfilled all requests for the first six months of 2026. That historical result and the plan's restrictions are both relevant. This is a dated example of one company's rules, not a recommendation, a prediction, or a standard that applies to every non-traded REIT.
Before relying on any plan today, read its latest version and amendments. Do not copy a percentage from another REIT or assume a limit describes what each individual shareholder may redeem. Company-wide capacity and your personal request are different things.
If someone describes repurchases as routine, ask to see both the operating history and the legal discretion. They answer different questions. A company can have paid every request recently while retaining the right to stop. Conversely, a past restriction does not prove that every future request will fail. Review the evidence without turning either fact into a promise.
Consider a simplified hypothetical plan. Assume the applicable NAV base is $1 billion and the plan permits up to 5% of that base to be repurchased in a quarter. The maximum is $50 million. If eligible requests total $100 million and all are treated equally, each request would receive 50% if the company uses the full capacity.
If you request $80,000, you would receive $40,000 under those assumptions. The remaining $40,000 is still invested. You have not earned a right to receive it next quarter. The plan's next period may have a new NAV, fresh requests, new limits, or no repurchases.
Now assume the company elects to use only $20 million of capacity, as permitted by this hypothetical plan. That meets 20% of requests, so your payment is $16,000. A stated ceiling describes the most allowed under the assumed rules, not a minimum the company must pay.
Real plans may have priority requests, multiple limits, early-exit deductions, or different valuation bases. This example leaves those out so the arithmetic is clear. The lesson is to budget from the contractual uncertainty, not from the most favorable possible payment.
Listed shares have changing market prices. A non-traded REIT may report an estimated net asset value, or NAV, on a stated schedule. NAV generally reflects estimated assets less liabilities, divided among shares according to the company's method. It depends on assumptions and the information available when calculated.
SEC staff guidance asks for disclosure of the valuation process, responsible parties, methods, key assumptions, and sensitivity to changes. Those are the items I would read before treating a statement value as reliable evidence of what you could receive. [5]
A property does not become immune to vacancy, higher borrowing costs, or lower buyer demand because its owner's shares lack a daily quote. A slower valuation schedule changes when you see an estimate. It does not remove the economic change.
Likewise, a listed share-price decline is not always meaningless market noise. It may reflect a valid concern about debt, rents, or future spending. You need to examine the business before deciding whether the market is reacting too strongly.
Suppose two otherwise similar investments each face an economic loss. One account shows a new quote today. The other reports an older valuation until its next update. Comparing the lines on the statements without comparing their dates and methods can create a false sense of stability.
Investors sometimes frame the choice as accepting a lower price or accepting a wait. In practice, a non-traded investor can face both a lower estimated value and a delayed exit. A listed investor can face both a falling price and temporary trading disruption.
Here is a hypothetical cash need. You have $200,000 invested and need $60,000 for an expense. A 20% share-value decline leaves $160,000. Selling $60,000 of a liquid position now uses 37.5% of what remains, before taxes and trading costs.
For a non-traded investment, an accepted $60,000 request might still be only partly filled. If it receives 25%, you get $15,000 and need another $45,000 elsewhere. A published account value of $200,000 would not solve that timing problem.
These are separate examples, not a prediction that either structure will suffer those events. They show why I ask about both loss tolerance and access to cash. Being willing to hold through a downturn is different from being able to do so.
A listed REIT is a company. A REIT mutual fund or exchange-traded fund owns a portfolio of securities and has its own fund expenses. Do not take an ETF's expense ratio and present it as the full cost of directly owning a listed REIT. The underlying company still has operating, financing, and management costs.
For a direct share purchase, examine brokerage or advisory charges that apply to your account. For a non-traded offering, examine upfront selling charges, ongoing servicing charges, management compensation, performance fees, and early-exit deductions where applicable. Fees reduce what you keep, even when they are paid inside the investment. [7]
Compare the actual share classes available to you. A headline fee from a different class may not apply. Also check whether a quoted return includes upfront charges, reinvested distributions, ongoing fees, and the same measurement period.
For a simple illustration, a 3% charge deducted from a $100,000 commitment leaves $97,000 to invest. With no other change, that amount needs about a 3.09% gain to return to $100,000. This is not a typical or required fee for either structure. It shows why the denominator matters.
Regular distributions may help with spending, but they are not guaranteed. They can be reduced or stopped. They also do not let you choose how much principal to withdraw when an unexpected bill arrives. Read the payment source and the company's cash needs.
The REIT distribution rule is a tax test. In general, the 90% calculation uses REIT taxable income before the dividends-paid deduction and excludes net capital gain, with statutory adjustments. It does not require a 90% shareholder return or promise a particular monthly amount. [8]
Tax character is another separate question. A payment may include ordinary dividends, capital gain distributions, or nondividend distributions. The IRS explains that nondividend distributions generally reduce stock basis, with amounts beyond basis generally treated as capital gain. “Return of capital” does not mean the investment has protected your original cash. [9]
A sale or repurchase can have tax consequences too. Ask your tax adviser about basis and the treatment of the particular transaction. Do not assume a cash payment is tax-free or that a redemption always has the same result for every shareholder.
Ordinary shares in either type of REIT generally do not qualify as Section 1031 replacement real property. The tax rules exclude stocks and other listed financial interests from the definition, subject to specific exceptions. Owning buildings through a company does not make its ordinary stock a deed. [10]
A Section 721 contribution to a REIT's operating partnership is a different transaction. The investor may receive partnership units with their own rights and limits. The tax rule for a qualifying property contribution does not promise immediate stock conversion or cash access. [11]
If a proposed DST investment includes a possible later partnership contribution, review that future ownership separately. Do not assume it must lead to a non-traded REIT, that the contribution is certain, or that today's redemption terms will still apply when you want to leave.
Start with dates rather than a target yield. List known expenses, possible large costs, and money that must remain accessible. Separate those needs from money you can leave invested for an uncertain period.
Next, test a bad year. What if distributions fall and your redemption is delayed at the same time? What if a listed investment falls just before your planned sale? Identify the other cash you would use. Do not count the same reserve twice for different needs.
I would ask for written answers to these questions:
There is no universal number of years that makes an illiquid investment fit everyone. Your other assets, spending, obligations, and ability to bear losses matter. A long time horizon helps only if you can handle what happens during it.
Consider two investors with the same $500,000 available to invest. The first also has cash set aside for a planned home repair and several years of expected spending. The second expects to use part of that $500,000 for those same needs. Their age and investment balance may match, but their ability to accept a delayed exit does not.
The first investor still needs to review price, loss risk, and costs. Spare cash does not make a weak investment strong. The second investor needs to resolve the spending gap before relying on a repurchase plan. This is why a broad label such as “long-term investor” cannot replace a cash plan.
For an existing holding, use the same process before making a change. Confirm the cost and tax result of leaving, the terms of the proposed replacement, and any period when neither provides ready cash. Switching from one limited plan to another does not necessarily improve access. Compare the complete path from today's holding to usable money.
Keep copies of the submitted request, the company's acknowledgment, and the final payment notice. If only part is paid, record what remains invested and whether a new request is required. Clear records help prevent a missed resubmission from becoming another delay.
No. Public non-traded REITs have registered offerings and public reporting, but no national exchange listing. Private offerings rely on registration exemptions. Ask about both disclosure status and trading access rather than using “private” for everything without a ticker. [1]
No. A quote is not a guaranteed execution price. A market order can fill at a different price, and a limit order may not fill at all. Trading halts and other market conditions can also interfere with access. [2] [3]
Not necessarily. Many limits apply to a company-wide base. Your payment depends on the actual plan, total requests, available capacity, and any priority rules. Read the defined base and allocation method instead of treating the percentage as a personal withdrawal allowance.
No. NAV is an estimate under a valuation method. It can change, and a share repurchase may be unavailable even when a NAV is published. Review the assumptions, timing, responsible parties, and redemption rules together. [5]
Most covered U.S. stock trades follow T+1: one business day after execution. Exceptions exist, and bank-transfer timing is a separate issue. Confirm the rules with your brokerage firm before relying on sale proceeds for a dated payment. [4]
A limited redemption plan is not a reliable source for a firm near-term bill. Listed shares usually offer greater market access, but their price can fall when you need to sell. Decide how much money needs stability and access before choosing either investment.
Educational information, not an offer or a personal tax, legal, or investment recommendation. Examples are hypothetical and omit stated adjustments. Tax treatment depends on your facts and current law. Review your transaction with your CPA, attorney, and qualified intermediary. Real estate investments can lose value and may be illiquid.
Enter your approved email to explore investments, save your shortlist, and keep learning.