# Non-Traded REITs Explained: NAV, Private and Public REITs

> Non-traded REITs explained: how NAV REITs, private REITs and listed REITs differ, plus share classes, redemption limits, valuation, fees, BDCs and risks.

Source: https://baker1031.com/learn/non-traded-reits-explained


By Jerry Baker, Founder, Baker 1031 Investments. Updated October 28, 2026. Topic: 721 Exchanges & UPREITs. Draft for review; not yet approved by Aurora Securities.

## The short answer

A non-traded REIT is a real estate investment trust that is registered with the SEC but whose shares do not trade on a stock exchange. The SEC warns that its up-front fees can reach up to 15 percent of the offering price, and that a chance to cash out may not come for more than 10 years.

## Key takeaways

- A non-traded REIT files reports with the SEC like a listed REIT, but you can't sell its shares on an exchange. You usually get money back only through a limited repurchase program or a later listing or liquidation.
- NAV REITs have become more common, FINRA says. They estimate a net asset value per share on a regular schedule and buy and sell shares at that value. That value comes from appraisals, not from trades.
- Repurchase programs have limits. The REIT can cap, prorate or suspend them, and the SEC notes they "may be discontinued at the discretion of the REIT without notice."
- A private REIT is not registered with the SEC at all. FINRA says private REITs are "primarily sold to institutional or accredited investors," and they come with less public information.
- REIT shares are stock, so you can't buy them in a 1031 exchange. The usual tax-deferred path from a property sale into a REIT is a DST with a 721 exit.
- In my offering records as of October 2026, 44 DST offerings (58%) have an optional 721 exit and 13 (17%) have a mandatory one. If you choose a DST with a 721 exit, study the REIT behind it as closely as the DST.

## What are non-traded REITs?

Let me start with the basic terms. I'll add one idea at a time.

A **REIT**, or real estate investment trust, is a company that owns, and usually runs, income-producing real estate. Investor.gov describes a REIT as "a company that owns and typically operates income-producing real estate or related assets." My guide to [what a REIT is](/learn/what-is-a-reit) covers the basics in more depth.

A REIT gets special tax treatment. In return, it has to meet rules in [26 U.S.C. § 856](https://www.law.cornell.edu/uscode/text/26/856). Its beneficial ownership must be "held by 100 or more persons." At least 75 percent of its assets must be real estate, cash or government securities. Most of its income must come from rents, mortgage interest and similar sources.

It also has to pay out most of its income. Under [26 U.S.C. § 857](https://www.law.cornell.edu/uscode/text/26/857), its dividends must generally equal at least "90 percent of the real estate investment trust taxable income for the taxable year."

The **SEC**, or Securities and Exchange Commission, is the federal agency that oversees securities markets. When a company "registers" an offering with the SEC, it files a long disclosure document and keeps filing public reports after that.

A **non-traded REIT** is a REIT that registers its offering with the SEC and files those reports, but does not list its shares on a stock exchange. You may also see the names "public non-listed REIT" or "non-exchange traded REIT." They mean the same thing.

The SEC's [Investor Bulletin on non-traded REITs](https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-non-traded-reits) puts the key trade-off plainly. These REITs are registered and file reports, but their shares can't be bought or sold easily, because there is no exchange where they trade.

Non-traded REITs are sold through **broker-dealers**, which are firms registered to sell securities, and through registered investment advisers (RIAs). You buy shares directly from the REIT during its offering. You read a **prospectus**, which is the legal disclosure document for a registered public offering.

### Why would anyone choose a REIT that doesn't trade?

People usually give three reasons.

1. **Steadier reported values.** A listed REIT's price can swing with the stock market. A non-traded REIT's share value comes from appraisals, so it tends to move more slowly.
2. **Income.** Like all REITs, non-traded REITs pay out most of their taxable income. Distributions, though, are not guaranteed.
3. **Access to real estate without buying a building.** You get a slice of a large portfolio for a small minimum. The SEC bulletin lists a typical minimum of "$1,000 - $2,500."

Each of those reasons has a cost. The smooth value is an estimate, not a price someone will pay you. The income can be cut, and part of it may be your own money handed back. And the slice of a big portfolio comes with fees and limits on getting out. I'll walk through each one.

## How is a private REIT different from a public REIT?

The words "public" and "private" cause a lot of confusion here. There are really three kinds of REIT, not two.

[FINRA](https://www.finra.org/investors/insights/reits-alternatives-to-ownership) sorts them this way. FINRA, the Financial Industry Regulatory Authority, is the self-regulatory organization that oversees broker-dealers. It says:

- "Publicly traded REITs are bought and sold by investors on national securities exchanges."
- "Public non-traded REITs are also regulated by the SEC but are not traded on a national exchange."
- "Private REITs are neither regulated by the SEC nor traded on national exchanges."

So a non-traded REIT is still a public company in one sense. It registers its offering with the SEC and files public reports. It just doesn't trade.

A **private REIT** is different. It sells shares in a private placement, which is an offering that skips SEC registration under an exemption. The most common exemption is **Regulation D**. FINRA notes private REITs are "primarily sold to institutional or accredited investors."

An **accredited investor** is a person who meets SEC income, net worth or license tests. Under the SEC's [accredited investor bulletin](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3), an individual generally qualifies with income over $200,000 ($300,000 with a spouse or spousal equivalent) in each of the prior two years and a reasonable expectation of the same this year. Net worth over $1 million, not counting a primary home, also works. So does holding a Series 7, 65 or 82 license in good standing. My [accredited investor guide](/learn/accredited-investor) explains each test.

The SEC's [bulletin on private placements](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/private) explains why that matters. Issuers in these offerings "are not required to provide the disclosure that would be required in a registered offering." It also says investors should be "prepared to hold the securities indefinitely."

### Listed vs. non-traded vs. private REITs at a glance

| | Listed (publicly traded) REIT | Non-traded REIT | Private REIT |
|---|---|---|---|
| Registered with the SEC | Yes | Yes | No (private placement) |
| Files public reports (10-K, 10-Q) | Yes | Yes | No, in general |
| Trades on an exchange | Yes | No | No |
| How you buy | Through a brokerage account, at the market price | From the REIT, through a broker-dealer or RIA | From the REIT, usually through a private placement memorandum |
| Who can buy | Anyone with a brokerage account | Investors who meet suitability standards in the prospectus | Mostly institutional or accredited investors |
| How you get out | Sell on the exchange any trading day | Limited repurchase program, or a later listing or liquidation | Whatever the offering documents allow; often very limited |
| How the share value is set | Market trading | Estimated from appraisals and the REIT's own process | Estimated, under the terms of the documents |
| Up-front costs | Trading costs | Can be high; see the fees section below | Varies; disclosed in the private placement memorandum |

A **private placement memorandum**, or PPM, is the disclosure document for a private offering. It does the same job as a prospectus, but no regulator reviews it in the same way.

### Are private REITs riskier than public ones?

They aren't automatically worse. But you get less public information, fewer outside eyes on the numbers and usually fewer ways out. That puts more of the checking work on you and the professionals you work with.

Before you invest in any REIT that isn't listed, FINRA suggests you "research the registration status and review recent filings." For a private REIT, there may be no public filings to review. That alone is a reason to slow down.

### How is a private REIT different from a real estate syndication?

A **real estate syndication** is a private offering in which a sponsor pools money from investors to buy one property or a small group of properties. It's usually set up as a limited liability company or a limited partnership. Like a private REIT, it's typically sold as a private placement, often only to accredited investors.

The main differences come down to structure:

- **What you own.** A private REIT elects REIT tax status and usually owns a portfolio. A syndication usually owns one or a few named properties.
- **How income is reported.** REIT distributions are reported on Form 1099-DIV. A syndication taxed as a partnership reports each investor's share of its income and deductions on a **Schedule K-1**, the form a partnership gives each owner. The IRS explains this on its [Form 1065 page](https://www.irs.gov/forms-pubs/about-form-1065).
- **How you get out.** Both are hard to sell. Your exit depends on the offering documents. In a syndication, it often depends on when the property is sold.

Neither one is safer by design. Read the private placement memorandum for either one with the same care.

## What is a NAV REIT?

**NAV** stands for net asset value. For a REIT, it's an estimate of what the company's properties and other assets are worth, minus its debts and other liabilities. Divide that by the number of shares and you get **NAV per share**.

A **NAV REIT** is a non-traded REIT that calculates NAV per share on a regular schedule and uses it as the price for new shares and repurchases. FINRA says NAV REITs "regularly calculate the value of the holdings in their portfolios" and "offer to sell or redeem shares in the REIT based on the latest NAV per share." The prospectus tells you how often NAV is calculated.

The older design is the **fixed-price** or "lifecycle" non-traded REIT. It sells shares at a set price during a multi-year offering. FINRA says these REITs "typically appraise their assets far less frequently than NAV REITs" and "tend to be less liquid." The plan is usually to raise money, buy properties, hold them for years and then end with a listing or a liquidation.

| Feature | Fixed-price (lifecycle) non-traded REIT | NAV REIT |
|---|---|---|
| Offering length | A set offering period | Often offers shares on an ongoing basis |
| Share price | Fixed during the offering | Updated NAV per share on a set schedule (see the prospectus) |
| How often assets are valued | Less often | Regularly |
| Main way out | A future listing or liquidation; limited repurchases before then | Ongoing repurchase program with caps |
| What the plan expects | A defined end | No set end date |

### How is a NAV calculated?

The details are in the prospectus, but the steps usually look like this:

1. **Value the properties.** Appraisers estimate each property's value, often using its net operating income and a capitalization rate. **Net operating income**, or NOI, is rent and other property income minus property operating costs. A **capitalization rate**, or cap rate, is the NOI divided by the value.
2. **Add other assets.** Cash, real estate debt investments and other holdings are added.
3. **Subtract liabilities.** Mortgages, credit lines, accrued fees and other obligations come off.
4. **Divide by shares.** The result is NAV per share, sometimes calculated separately for each share class.

The SEC bulletin warns that "any share valuation will be based on periodic or annual appraisals of the properties." It adds that those appraisals may not be accurate or timely. When property prices fall fast, appraised values tend to lag. That matters because the REIT uses NAV to price repurchases.

### NAV is an estimate, not a price

This is the point I most want you to take away from this section. A listed REIT's price is what buyers paid today. A NAV is what the REIT and its appraisers estimate the shares are worth. Nobody is required to pay you that amount, and the REIT can limit how many shares it buys back at it.

If you want to compare a REIT's NAV with its earnings, debt and payout, my guide on [FFO and how to evaluate a REIT](/learn/how-to-evaluate-a-reit) explains those measures.

## How do non-traded REIT share classes work?

Many non-traded REITs offer more than one **share class**. Each class owns the same portfolio. The difference is how the selling and servicing costs are paid.

In general terms, classes sold through commission-based brokerage accounts may carry an up-front selling commission and an ongoing servicing fee. Classes sold through fee-based advisory accounts may have no commission, but you pay an advisory fee on the account instead. Some classes are for institutions or large accounts.

Because the costs differ, the NAV per share or the distributions can differ by class. The exact letters ("Class T," "Class S," "Class D," "Class I" and so on) and the exact fees vary by REIT. The prospectus fee table is the only reliable source.

Here are the questions I'd ask about any share class:

- What up-front commission or dealer-manager fee (a fee paid to the firm that runs the offering's sales effort) applies, if any?
- Is there an ongoing servicing fee? How much, and does it stop after a cap?
- Does the class convert into another class later?
- How do this class's distributions compare with other classes, after fees?
- Am I also paying an advisory fee on top?

## What fees do non-traded REITs charge?

Fees are one of the biggest differences between listed and non-traded REITs. The SEC sources give these figures:

- The SEC's [Investor Bulletin](https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-non-traded-reits) says up-front fees "can represent up to 15 percent of the offering price." Those fees lower the value of your investment and the money left to buy property.
- Investor.gov's page on [REITs](https://investor.gov/introduction-investing/investing-basics/investment-products/real-estate-investment-trusts-reits) says "Sales commissions and upfront offering fees usually total approximately 9 to 10 percent of the investment."

These are the SEC's general descriptions, not a figure for any particular REIT. Some share classes have lower or no up-front fees but charge ongoing fees instead. The only number that counts is the one in the prospectus you're reading.

### Fees you may pay

| Fee | When it's paid | What it pays for |
|---|---|---|
| Selling commission | Up front, on some share classes | The broker-dealer that sold the shares |
| Dealer-manager fee | Up front, on some share classes | The firm that manages the offering |
| Organization and offering costs | Up front, from offering proceeds | Legal, accounting, marketing and printing |
| Ongoing servicing fee | Every year, on some share classes | Ongoing service by the selling firm |
| Advisory or management fee | Every year | The REIT's outside manager, often based on NAV |
| Performance fee | When results beat a set hurdle | The outside manager |
| Acquisition, financing or disposition fees | When properties are bought, financed or sold | The manager or its affiliates, where charged |
| Property management and leasing fees | Ongoing | Often an affiliate of the manager |

### Why external management matters

The SEC bulletin says "Non-traded REITs are typically externally managed – meaning the REITs do not have their own employees." An outside company, often affiliated with the sponsor, runs the REIT for a fee.

The bulletin warns that the manager may be paid for "services that may not necessarily align with the interests of shareholders." For example, a fee based on assets under management rewards growth in size, even when growth doesn't help shareholders. A fee paid on each acquisition rewards buying. That isn't proof of bad behavior. It's a conflict of interest you should understand before you invest.

### A worked example: what fees do to your starting value

This is a hypothetical example with round numbers. The fee levels are made up for illustration. They aren't typical of, or drawn from, any REIT or any offering.

Say you invest $100,000 in a fixed-price non-traded REIT at $10.00 per share. You get 10,000 shares. Say the prospectus shows that 10% of offering proceeds pays commissions, dealer-manager fees and offering costs.

- Money that reaches the REIT for investment: $100,000 × 90% = $90,000
- That's $9.00 of investable money per $10.00 share

Now say the REIT's properties hold their value exactly for two years. Your shares are still backed by about $9.00 each, before any other changes. The properties would need to rise about 11% just for the backing to reach $10.00 again ($9.00 × 1.111 ≈ $10.00).

Now look at a second hypothetical class with no up-front fee and a 0.85% yearly servicing fee. All $100,000 goes to work on day one. Over ten years, though, a 0.85% yearly fee on roughly $100,000 adds up to roughly $8,500 before any growth. Neither path is free. They just charge you at different times.

## How do non-traded REIT redemption programs work?

A **share repurchase program**, also called a share redemption program, is the REIT's plan for buying back shares from investors before any listing or liquidation. It's the main way out of a non-traded REIT. It's also where many investors meet surprises.

### What the SEC and FINRA say

The SEC bulletin says these programs "may be discontinued at the discretion of the REIT without notice." It also warns that shares may "be redeemed at a discount, meaning investors lose part of their investment."

### Common features

Every prospectus sets its own terms. These are the features to look for:

- **Volume caps.** The REIT limits total repurchases, often as a small percentage of NAV or shares per month or per quarter.
- **Pro rata fills.** If requests exceed the cap, each request is filled in proportion. "Pro rata" means each investor gets the same share of what they asked for.
- **Early-repurchase discount.** Shares held less than a set period may be bought back below NAV.
- **Board discretion.** The board can change, limit or suspend the program.
- **Timing.** You usually submit a request before a deadline. The price is set by a NAV calculated later, so you may not know the exact price when you ask.

### A worked example: when requests exceed the cap

This is hypothetical, and the limits are made up for illustration. They aren't the terms of any REIT.

Say a NAV REIT has a $10 billion NAV. Its plan caps repurchases at 2% of NAV per month, or $200 million. One month, investors ask to redeem $800 million.

- Requests filled: $200 million ÷ $800 million = 25%
- You asked to redeem $200,000. You receive $50,000.
- The other $150,000 stays invested. You can usually ask again next month, but there's no promise the next month will be any better.

If you held your shares for less than the plan's early-repurchase period, a hypothetical 5% discount would cut that $50,000 to $47,500.

Now picture the same thing for several months in a row. Investors who were counting on "monthly liquidity" learn that the program was always a limited window, not a door that stays open.

### How long until a liquidity event?

A **liquidity event** is when a non-traded REIT gives all shareholders a way out. The SEC bulletin describes it as when the REIT "lists its shares on an exchange or liquidates its assets." It also warns these events "might not occur until more than 10 years after your investment."

If the REIT lists, your shares start trading. The market price may be above or below the last estimated value. If it liquidates, it sells its properties and pays out what's left after debts and fees. Either way, the timing is the board's call, not yours.

## How do non-traded REITs value your shares on your statement?

This is where FINRA's rules come in. For years, many statements just showed the price you paid. FINRA's [Regulatory Notice 15-02](https://www.finra.org/rules-guidance/notices/15-02) described the old practice: "The offering price, typically $10 per share, often remains constant on customer account statements during this period."

That notice, published in January 2015, announced SEC-approved changes to NASD Rule 2340 that took effect on April 11, 2016. FINRA has since moved that rule into [FINRA Rule 2231](https://www.finra.org/rules-guidance/rulebooks/finra-rules/2231), its rule on customer account statements. It allows two ways to show a per-share estimated value for unlisted REIT shares.

### The net investment method

Early in a REIT's life, a firm may show a value based on "net investment." That is roughly the share price minus the up-front commissions, dealer-manager fees and offering costs shown in the prospectus. Rule 2231 allows this method "At any time before 150 days following the second anniversary of breaking escrow." Breaking escrow means the REIT has raised enough money to release investor funds and start investing.

If part of your distribution is a return of capital, which means some of your own investment is being paid back to you, the statement must say so. The required wording includes "IMPORTANT—Part of your distribution includes a return of capital." It must also say: "Any distribution that represents a return of capital reduces the estimated per share value shown on your account statement."

### The appraised value method

At any time, a firm may show a value based on an appraisal. Under Rule 2231, that valuation must be done "at least annually" by, or with the material help or confirmation of, "a third-party valuation expert or service." It must also follow "a methodology that conforms to standard industry practice."

### The required warnings

Whichever method is used, the statement must say the shares "are not listed on a national securities exchange, are generally illiquid." It must also say "the price received may be less than the per share estimated value provided in the account statement."

I think that last sentence is the most important one on the statement. The number is an estimate, and a real sale or repurchase may pay you less.

## What does a non-traded REIT's distribution really tell you?

A **distribution** is cash a REIT pays to shareholders. People often call it a dividend. A **distribution rate** is the yearly distribution divided by the share price or NAV.

A high distribution rate can look attractive. The SEC bulletin cautions that early payouts may not come from operating earnings. It says "Non-traded REITs may use offering proceeds, which includes the money you invested, and borrowings to pay distributions." Investor.gov adds that non-traded REITs "frequently pay distributions in excess of their funds from operations."

**Funds from operations**, or FFO, is a common REIT earnings measure. It adds real estate depreciation back to net income, among other changes. The REIT evaluation guide linked above explains it in detail.

When a REIT pays out more than its operations bring in, the gap has to come from somewhere. It might be new investors' money, borrowed money or asset sales. That can lower the value of each share. The SEC suggests you look at the REIT's total return, which is distributions plus any change in value, and not only the distribution rate.

### A worked example: covering the distribution

This is a hypothetical example with made-up round numbers. It doesn't describe any REIT.

Say a non-traded REIT pays $60 million of distributions in a year. Its cash flow from operations is $45 million.

- Gap: $60 million − $45 million = $15 million
- Share of the distribution not covered by operations: $15 million ÷ $60 million = 25%

That $15 million had to come from new share sales, borrowing or selling assets. Before you invest, find the REIT's own disclosure of how it funded distributions. It's usually in the prospectus and the annual report.

### How distributions are taxed, in brief

REIT distributions are reported on Form 1099-DIV. Part may be ordinary dividends, part capital gain distributions and part a return of capital. The IRS explains in [Tax Topic 404](https://www.irs.gov/taxtopics/tc404) that a return of capital generally isn't taxed when you receive it. Instead, it lowers your cost basis, which is generally what you paid for the shares. Once your basis reaches zero, further return-of-capital distributions are taxed as capital gain. My guide to [REIT dividends and taxes](/learn/reit-dividends-and-taxes) covers each piece. Your CPA should look at your actual forms.

## Interval funds vs. non-traded REITs: how do they compare?

An **interval fund** is another product that offers periodic liquidity. It's built differently from a REIT, though.

The SEC's [bulletin on interval funds](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-interval-funds) says they "are legally classified as closed-end funds, a type of investment company." A **closed-end fund** is a fund that doesn't stand ready to buy back shares every day, unlike a typical mutual fund.

An interval fund makes repurchase offers on a set schedule. The SEC says it will "only buy back a certain percent—5% to 25%—of all outstanding shares during a repurchase offer," and that offers "are generally made every three, six, or twelve months." If too many investors ask, "repurchase is generally done on a pro rata basis." The bulletin also warns: "You will not be able to sell your fund shares whenever you want."

## BDC vs. REIT: what's the difference?

A **BDC**, or business development company, is often sold through the same channels as non-traded REITs. It invests in something else entirely.

The SEC's [bulletin on non-publicly traded BDCs](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-non-publicly-traded-business-development-companies-bdcs), published December 13, 2024, says "BDCs are a type of closed-end investment fund." They are "a way for retail investors to invest money in small and medium-sized private companies."

So a REIT's results depend on rents and property values. A BDC's results depend on how the private businesses it invests in perform. Both may pay regular distributions, and both can be illiquid. The SEC says non-traded BDCs are "illiquid" and that investors "can generally only sell their shares when the BDC offers to repurchase them."

| | Non-traded REIT | Interval fund | Non-traded BDC |
|---|---|---|---|
| Legal form | Company that elects REIT tax status | Closed-end fund (investment company) | Closed-end investment fund |
| What it owns | Real estate or real estate debt | Depends on the fund's strategy | Investments in small and mid-size private companies |
| Main income source | Rent and property income | Depends on holdings | Returns on its investments in private companies |
| How you get out | Repurchase program the board can limit or suspend; later listing or liquidation | Scheduled repurchase offers of 5% to 25% of shares | Repurchase offers made by the BDC |
| Key risk to watch | Property values, debt and valuation lag | Holdings that are hard to sell | How the private companies perform, and leverage |
| Can be 1031 replacement property? | No | No | No |

A **1031 exchange** lets you defer tax on the sale of investment real estate by reinvesting in other real property. None of the three can be bought with 1031 exchange money and keep the deferral. That leads to a common question about 1031 and 721 plans.

## How do non-traded REITs connect to 721 exchanges?

Usually through a Delaware Statutory Trust (DST) with a 721 exit, not through a 1031 exchange on its own. [Section 1031](https://www.law.cornell.edu/uscode/text/26/1031) covers an exchange of real property "solely for real property of like kind." REIT shares are stock, not real property, whether the REIT is listed, non-traded or private. Buying them with sale proceeds generally means the gain is taxed first. My guide to [whether you can 1031 into a REIT](/learn/can-you-1031-into-a-reit) walks through the details.

The indirect route is a **721 exchange**. Section 721 of the tax code generally lets you contribute property to a partnership for an interest in it without current tax. In real estate, that partnership is usually a REIT's **operating partnership**, or OP. The OP is the partnership under the REIT that actually owns the buildings. In return you get **OP units**, which are partnership interests designed to track REIT shares. My [721 exchange guide](/learn/721-exchange-guide) covers the rules.

Here's how the two steps usually work:

1. You sell investment property and do a 1031 exchange into a **Delaware Statutory Trust**, or DST. A DST is a trust that owns real estate, and its interests can qualify as 1031 replacement property.
2. Later, the REIT's OP may acquire the DST's property for OP units under Section 721.

Many REITs on the other side of these programs are non-traded. So everything in this guide about NAV, fees and repurchase limits applies to your units. OP units can usually be redeemed later for cash or REIT shares, and those redemptions are generally taxable. In a non-traded REIT, they also depend on the REIT's repurchase limits. My guide to [OP units](/learn/op-units-explained) explains how redemptions and taxes work. For a full side-by-side of the two structures, see my guide on [DSTs vs. REITs](/learn/dst-vs-reit).

## How to check a non-traded REIT before you buy, step by step

This is a practical order of work. It applies to a non-traded REIT you're buying directly and to the REIT behind a DST's 721 exit.

### Step 1: Confirm the registration and the seller

Look up the REIT's filings on the SEC's EDGAR database. Investor.gov's guide to [using EDGAR](https://www.investor.gov/introduction-investing/getting-started/researching-investments/using-edgar-research-investments) explains how to find annual reports (Form 10-K), quarterly reports (Form 10-Q) and current reports (Form 8-K). The SEC bulletin notes the prospectus and its supplements are "usually identified as a '424B3' filing."

Then check the person selling it to you on FINRA's [BrokerCheck](https://brokercheck.finra.org/). The SEC bulletin says an unregistered seller "could be a red flag for fraud."

### Step 2: Read the fee table and the share class terms

Find the up-front fees, ongoing servicing fees, management fee and any performance fee. Add them up for the class you'd buy. Ask how much of each dollar you invest actually goes into real estate.

### Step 3: Read the repurchase plan word for word

Note the caps, the early-repurchase discount, the request deadlines and the board's power to change or suspend the plan. Then ask a simple question. If the plan were suspended for a year, would that hurt me?

### Step 4: Check how distributions are funded

Compare distributions with cash flow from operations and FFO for recent years. Look for any disclosure that distributions came from offering proceeds, borrowings or asset sales.

### Step 5: Understand the valuation

Find who values the portfolio, how often and with what method. Look at the cap rates the appraisers used. Ask how the NAV changed when property markets moved.

### Step 6: Look at debt and the portfolio

Check total debt, how much is floating-rate and when loans come due. Look at the property types, the markets and the largest tenants. My REIT evaluation guide, linked earlier, has a full checklist.

### Step 7: Read the conflicts section

See who the outside manager is, how it's paid and what its affiliates earn. Check whether the manager runs other funds that buy similar properties.

### Step 8: Confirm the plan with your CPA

Talk with your CPA about the tax reporting and how this fits your other holdings. If the REIT is part of a 721 path, also involve your attorney and your qualified intermediary. A **qualified intermediary**, or QI, is the company that holds your sale proceeds during a 1031 exchange.

## Mistakes to avoid with non-traded REITs

These are common mistakes.

1. **Treating the NAV as a market price.** It's an estimate. A repurchase or later sale can pay less.
2. **Counting on monthly liquidity.** Repurchase plans have caps. The board can limit, prorate or suspend them.
3. **Reading the distribution rate as a return.** Part of a distribution can be your own capital handed back, or money from borrowing.
4. **Skipping the share class details.** Two classes of the same REIT can carry very different costs over ten years.
5. **Ignoring the outside manager's pay.** Fees tied to size or to deals create conflicts. Read how the manager earns money.
6. **Putting money you may need into it.** The SEC warns a liquidity event may not come for more than ten years.
7. **Assuming a private REIT gives you the same information.** A private REIT doesn't file public reports. You get what the documents give you.
8. **Trying to buy REIT shares inside a 1031 exchange.** It doesn't work. REIT shares aren't real property.
9. **Forgetting the REIT behind a 721 DST.** If your DST has a 721 exit, your future liquidity depends on that REIT's repurchase plan. Read its prospectus now.
10. **Concentrating too much in one sponsor.** A non-traded REIT is one manager, one board and one set of fees.

## Are private REITs safe?

No REIT is safe in the sense of protecting your money. Listed, non-traded and private REITs can all lose value. All REIT distributions can be cut or stopped.

FINRA's [REIT insight](https://www.finra.org/investors/insights/reits-alternatives-to-ownership) says "All REITs come with fees and expenses, as well as risks." It adds that "REIT fraud is real." Private REITs add their own layer of risk, because they don't file public reports and are hard to sell. That doesn't make every one a bad investment. It means you should expect less information and less liquidity, and plan for both.

Here are the main risks of non-traded and private REITs:

- **Illiquidity.** There's no exchange. Repurchase programs are limited and can be suspended. You may have to hold for many years.
- **Loss of principal.** Property values can fall. You can lose part or all of your investment.
- **Distributions are not guaranteed.** They can be reduced or stopped, and may be funded from sources other than operations.
- **Valuation risk.** NAV and per-share estimated values are based on appraisals that can lag or be wrong.
- **Fees.** Up-front and ongoing fees reduce returns.
- **Conflicts of interest.** An outside manager may be paid in ways that don't line up with your interests.
- **Leverage.** Debt magnifies losses and adds refinancing risk.
- **Less disclosure for private REITs.** There may be no public reports at all.
- **Tax-law change.** REIT tax rules can change.

## What my data shows

[My background](/about) is in real estate acquisitions, management and development, and I've been involved in more than $10 billion of real estate investment activity. My firm offers DSTs, including programs with 721 paths. It doesn't sell REIT shares. My offering records as of October 2026 track DST offerings, not REITs, but they do show how often a DST can lead you into a REIT.

Here's what [my offering records](/data/dst-offerings) as of October 2026 show, across 76 DST offerings from 38 sponsors. These figures describe the offerings I track. They aren't a forecast or a promise about any future offering.

### Many DSTs carry a door into a REIT

| 721 (UPREIT) exit | Offerings | Share |
|---|---|---|
| Optional | 44 | 58% |
| Mandatory | 13 | 17% |
| None | 17 | 22% |
| Unclear | 2 | — |

**In my offering records as of October 2026, 13 offerings (17%) make the 721 exit mandatory.** If the operating partnership uses its option, investors in those programs end up holding OP units in a REIT. When that REIT isn't listed, your later liquidity runs through its repurchase plan.

In the same records, another 44 offerings (58%) make the 721 exit optional. Read those terms closely, because "optional" can mean different things in different documents. And 17 offerings (22%) have no 721 exit at all, so no conversion into a REIT is built into their terms.

### Minimums and hold periods

In my offering records as of October 2026, the median DST minimum investment is $100,000. Minimums range from $25,000 to $500,000, and 21 offerings (28%) start at $25,000. The SEC's 2015 bulletin lists typical non-traded REIT minimums of $1,000 to $2,500, which is far lower.

A 10-year projected hold is the most common in those records, at 31 offerings. That's in the same range as the SEC's warning that a non-traded REIT liquidity event may not come for more than 10 years. Both are long-term, illiquid commitments.

When we meet, I can walk you through [the DST offerings I currently have available](/invest), including which ones have a 721 exit and which don't. Securities are offered through Aurora Securities, Inc., member FINRA/SIPC.

## Frequently asked questions

### What is the difference between a non-traded REIT and a publicly traded REIT?

Both are registered with the SEC and file public reports. A publicly traded REIT's shares trade on a stock exchange every market day, while a non-traded REIT's shares don't trade and can usually be sold back only through a limited repurchase program. Non-traded REITs also tend to carry higher up-front fees.

### How does a NAV REIT set its share price?

A NAV REIT is a non-traded REIT that regularly estimates its net asset value per share and uses that figure to price new shares and repurchases. The value comes from appraisals, not from trading. Repurchases at NAV are still capped and can be suspended.

### Can I sell my non-traded REIT shares whenever I want?

No. You can usually ask the REIT to repurchase shares under its program, but the program has limits, requests may be filled only in part, and the board can suspend it. A full exit may have to wait for a listing or liquidation, which the SEC says may take more than 10 years.

### Why is the value on my statement different from what I paid?

Under FINRA Rule 2231, your statement shows a per-share estimated value based on either net investment, which takes out up-front fees, or an appraisal. Returns of capital can also lower the net investment value. The statement must also warn that the price you receive may be less than that value.

### Who can invest in a private REIT?

Private REITs are sold through private placements, mostly to institutional or accredited investors. An individual generally qualifies as accredited through income, net worth or certain securities licenses in good standing. The rules and minimums for each offering are in its private placement memorandum.

### Can non-traded REIT distributions be cut?

Yes, because distributions are not guaranteed. They can be reduced or stopped, and the SEC notes that non-traded REITs may pay them from offering proceeds and borrowings. Compare distributions with cash flow from operations before you invest.

### Is a BDC the same as a REIT?

No. A REIT owns real estate or real estate debt, while a BDC is a closed-end fund that invests in small and medium-sized private companies. Both can be non-traded and illiquid, so read the repurchase terms for either one.

### What happens to my non-traded REIT shares if the repurchase program is suspended?

You generally can't sell them back until the board reopens the program, or until the REIT lists or liquidates. Your shares stay invested, and their value can still change. Read the prospectus to see what notice, if any, the REIT must give.

### What happens to a non-traded REIT at a liquidity event?

The REIT either lists its shares on an exchange or sells its assets and pays out what's left. A listing gives you a market price, which may be above or below the last estimated value. The timing is up to the REIT's board.

### How do I research a non-traded REIT?

Start with its prospectus and annual and quarterly reports on the SEC's EDGAR database. Then check the person selling it on FINRA BrokerCheck. Ask a CPA to review the tax reporting before you buy.

## Before you act

This guide is for education only. It isn't tax, legal or investment advice, and it isn't an offer to buy or sell any security. Please confirm every decision with your CPA, attorney and qualified intermediary, and read the full prospectus or private placement memorandum. REITs and DSTs involve risk, distributions are not guaranteed, and you can lose your entire investment.

## Sources

- [26 U.S.C. § 856, Definition of real estate investment trust (Cornell LII)](https://www.law.cornell.edu/uscode/text/26/856)
- [26 U.S.C. § 857, Taxation of real estate investment trusts and their beneficiaries (Cornell LII)](https://www.law.cornell.edu/uscode/text/26/857)
- [26 U.S.C. § 1031, Exchange of real property held for productive use or investment (Cornell LII)](https://www.law.cornell.edu/uscode/text/26/1031)
- [Investor.gov, Investor Bulletin: Non-traded REITs](https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-non-traded-reits)
- [Investor.gov, Real Estate Investment Trusts (REITs)](https://investor.gov/introduction-investing/investing-basics/investment-products/real-estate-investment-trusts-reits)
- [Investor.gov, Investor Bulletin: Interval Funds](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-interval-funds)
- [Investor.gov, Non-Publicly Traded Business Development Companies (BDCs): Investor Bulletin](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-non-publicly-traded-business-development-companies-bdcs)
- [Investor.gov, Private Placements Under Regulation D](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/private)
- [Investor.gov, Accredited Investors: Updated Investor Bulletin](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3)
- [Investor.gov, Using EDGAR to Research Investments](https://www.investor.gov/introduction-investing/getting-started/researching-investments/using-edgar-research-investments)
- [FINRA, Real Estate Investment Trusts: Alternatives to Ownership](https://www.finra.org/investors/insights/reits-alternatives-to-ownership)
- [FINRA Rule 2231, Customer Account Statements](https://www.finra.org/rules-guidance/rulebooks/finra-rules/2231)
- [FINRA Regulatory Notice 15-02](https://www.finra.org/rules-guidance/notices/15-02)
- [FINRA BrokerCheck](https://brokercheck.finra.org/)
- [IRS, Topic No. 404, Dividends](https://www.irs.gov/taxtopics/tc404)
- [IRS, About Form 1065, U.S. Return of Partnership Income](https://www.irs.gov/forms-pubs/about-form-1065)

---

Securities are offered through Aurora Securities, Inc., member FINRA/SIPC. Baker 1031 Investments, LLC is independent of Aurora Securities, Inc. and is not a registered broker-dealer or investment adviser. This content is general education, not investment, tax, or legal advice, and is not an offer to buy or sell securities. Offers are made only through the offering documents to eligible investors, generally accredited investors. DST interests are illiquid, distributions are not guaranteed, and you can lose your entire investment.

Contact: Jerry Baker, Baker 1031 Investments · hello@baker1031.com · (415) 965-0552 · https://baker1031.com/contact