Non-Traded REIT
Definition
A non-traded REIT is a real estate investment trust that sells shares to the public through a continuous offering but does not list them on a stock exchange. Investors buy from the REIT at a price its adviser sets, usually a monthly or quarterly net asset value per share, and can sell only back to the REIT through a share repurchase plan that is capped, commonly at 2 percent of aggregate NAV per month and 5 percent per quarter, and that the board can reduce or suspend. The modern form, the NAV REIT, dates from 2017: perpetual life, monthly NAV, multiple share classes with ongoing servicing fees instead of a large upfront commission, and a 12.5 percent performance participation for the adviser above a 5 percent hurdle in the largest programs. The legacy form, the lifecycle non-traded REIT of the 2000s, sold shares at a fixed $10 with around 10 percent of upfront commissions and fees, and promised a listing or sale after five to seven years. Both are REITs for tax purposes, distributing at least 90 percent of taxable income, and their distributions are often partly a return of capital funded by borrowing or offering proceeds rather than by operating cash flow. Non-traded REITs reach investors by two regulatory routes: registration on Form S-11 with Exchange Act reporting, used by the wirehouse-distributed programs, and Regulation A Tier 2, capped at $75 million a year, used by the online platforms such as Fundrise and RealtyMogul.
Why it matters
The non-traded REIT is the vehicle through which most individual investors own private real estate, and it is the vehicle in which the gap between a fund's stated price and what an investor can actually realize has been widest. A NAV is an appraisal-based estimate set by the party that earns fees on it; the repurchase plan that turns the NAV into cash is capped and can be switched off; and the distribution that makes the product feel like a bond is often partly the investor's own capital coming back. None of that is hidden. It is in the prospectus, the 10-K or the 1-K, the 253G2 supplements and the 1099-DIV. AltStreet's review of RealtyMogul Income REIT traces the full sequence in one Reg A program: a distribution cut from 6 percent to 3 percent to 1.5 percent, a NAV marked from $7.67 to $7.49 to $6.85 over two quarters, and a repurchase plan suspended in April 2026 after requests exceeded its limits. The BREIT proration of 2022 to 2024 showed the same mechanics at a scale of tens of billions. The questions for any non-traded REIT are the same: who sets the NAV and how often, what is the repurchase cap and has it bound, and what share of the distribution was earned.
Common misconceptions
- •The NAV is not a price anyone has paid. It is the adviser's estimate from appraisals; the repurchase plan is the only place it becomes cash, and the plan can be suspended.
- •Monthly liquidity is not liquidity for everyone. A 2 percent monthly cap means the whole fund can exit in about four years if every month is fully used; in a run the queue is prorated.
- •A steady distribution is not evidence of steady earnings. The 1099-DIV return-of-capital line and the cash flow statement's sources of distributions show how much was earned.
- •Not listing does not mean not marked. NAV REITs mark monthly; the marks are smoother than listed REIT prices because appraisals lag, not because the assets are less volatile.
Technical details
Share repurchase plan mechanics (NAV REIT standard)
Frequency: monthly requests, submitted by a stated date, repurchased at the NAV as of the last day of the prior month.
Caps: 2 percent of aggregate NAV per month and 5 percent per quarter, measured on total NAV across classes; unused capacity does not carry forward in most plans.
Early repurchase deduction: shares held less than one year are repurchased at 95 percent of NAV; waived on death or disability.
Proration: when requests exceed the cap, each request is filled in the same proportion; unfilled balances must be resubmitted and do not keep priority.
Suspension and amendment: the board may modify, suspend or terminate the plan on notice, and most plans say the board will consider doing so if repurchases would impair the REIT's liquidity or operations.
Funding: repurchases are paid from cash, operating cash flow, borrowings and proceeds of new share sales; a REIT whose inflows have stopped funds repurchases by selling assets or drawing on its credit line.
NAV determination
Property values: appraised by independent appraisers on a rolling schedule, commonly each property once a year with adviser updates in between, reviewed by an independent valuation adviser that opines on the process, not on each value.
Debt and derivatives: marked at fair value monthly; a rise in rates increases the value of fixed-rate liabilities in the REIT's favor, which is why NAVs held up in 2022 while listed REITs fell.
Timing: monthly NAV published around the 15th to 20th of the following month for registered NAV REITs; quarterly for most Reg A programs, filed as a 253G2 supplement to the offering circular.
Per-class NAV: each class carries its own NAV, differing by accrued servicing fees.
Who sets it: the adviser, under procedures the board approved; the REIT's auditor audits the financial statements at year end but does not certify the monthly NAV.
Reg A programs: the manager's own accountants typically calculate the NAV, with or without third-party appraisals; RealtyMogul Income REIT states its NAV is computed quarterly by the manager's internal accountants.
Share classes and fee layers (registered NAV REIT)
Class T: up to 3 percent selling commission plus 0.5 percent dealer manager fee upfront; stockholder servicing fee about 0.85 percent a year until the cap.
Class S: up to 3.5 percent upfront selling commission; servicing fee about 0.85 percent a year.
Class D: no upfront commission; servicing fee 0.25 percent a year; sold through fee-based accounts.
Class I: no commission or servicing fee; $1 million minimum or fee-based advisory accounts.
Servicing fee cap: fees stop when total upfront and ongoing selling costs reach roughly 8.75 percent of the gross proceeds of the share, after which T and S shares convert to I shares.
Adviser: management fee 1.25 percent of NAV a year; performance participation 12.5 percent of total return above a 5 percent annual hurdle, subject to a high-water mark, paid in shares of the operating partnership.
Property level: acquisition, financing and disposition fees vary by program; some NAV REITs charge none and some Reg A programs charge 1 to 3 percent at acquisition.
Legacy lifecycle REITs versus NAV REITs
Offering price: fixed $10 (or $25) for the whole offering, versus monthly NAV.
Upfront load: 7 percent commission plus 3 percent dealer manager fee, plus organization and offering costs, so about $8.50 to $8.70 of each $10 was invested; versus 0 to 3.5 percent by class.
Life: finite, with a liquidity event (listing, merger or liquidation) targeted within five to seven years of the offering close, often delayed; versus perpetual.
Valuation: no per-share estimate until FINRA Rule 15-02 (effective April 2016) required an estimated value on account statements, which exposed the load; versus monthly NAV from the first month.
Repurchase: limited plans, often 3 to 5 percent of shares a year and frequently suspended before the liquidity event; versus 2 percent monthly and 5 percent quarterly.
Outcome record: FINRA and SEC actions over the 2010s addressed distribution funding, valuation and sales practices in the legacy generation; the NAV REIT was the industry's redesign in response.
Reg A platform REITs: what is different
Cap: $75 million of sales in any 12 months per issuer under Tier 2, which is why platforms run multiple REITs in parallel; Fundrise merged seven legacy eREITs into one Exchange Act reporting vehicle in April 2026.
Reporting: Form 1-K annual with audited statements, Form 1-SA semiannual unaudited, Form 1-U for material events, 253G2 for NAV and price changes; no 10-Q, no proxy rules, no Sarbanes-Oxley internal control attestation.
Investors: non-accredited investors limited to 10 percent of the greater of income or net worth per offering; minimums of $10 to $5,000.
Liquidity: quarterly redemption plans set by the manager, commonly with early redemption penalties on a sliding scale in the first five years and quarterly caps; suspended by manager decision, as RealtyMogul Income REIT did in April 2026 and the Fundrise eREITs did ahead of their 2026 merger.
Governance: many are LLCs managed by an affiliate of the platform with no independent directors; the Delaware LLC agreement may limit the manager's fiduciary duties.
AltStreet's Regulation A lane tracks these programs' 1-K, 1-SA, 1-U and 253G2 filings; the entity pages carry the filed NAV history.
Reading the distribution
Sources of distributions table (10-K or 1-K): cash flow from operations, borrowings, offering proceeds and distribution reinvestment; the share funded from operations is the number.
FFO and AFFO: net income plus real estate depreciation, adjusted for straight-line rent and capital items; compare the annualized distribution with AFFO per share.
1099-DIV: ordinary dividend, capital gain and nondividend distribution (return of capital) boxes; return of capital defers tax and reduces basis, and a distribution that is mostly return of capital in a year with no asset sales was not earned that year.
Distribution reinvestment plan: the share of distributions reinvested is new capital, and a REIT with a high reinvestment rate has smaller net cash distributions to fund than the headline rate implies.
Rate history: cuts, and changes from monthly to quarterly, precede repurchase suspensions in most stressed programs.
Frequently asked questions
- What is a non-traded REIT?
- A REIT that raises money from the public in a continuous offering but whose shares do not trade on any exchange. The price is a NAV the adviser calculates, and liquidity comes only from the REIT buying shares back under a repurchase plan with monthly and quarterly caps. It is a real estate fund that looks like a stock but cannot be sold like one.
- How do you get your money out of a non-traded REIT?
- By submitting a repurchase request under the REIT's share repurchase plan, usually monthly, at the prior month's NAV less a 5 percent deduction if the shares were held under a year. The plan typically caps repurchases at 2 percent of NAV per month and 5 percent per quarter; if requests exceed the cap they are filled pro rata and the rest must be resubmitted. The board can amend or suspend the plan at any time. There is no secondary market of any depth, and the few matching services that exist trade at deep discounts.
- What is a NAV REIT?
- The post-2017 design of non-traded REIT: shares priced at a NAV struck monthly by the adviser with an independent valuation firm reviewing the appraisals, sold continuously with no end date, in several share classes (T, S, D, I) that differ in upfront and ongoing fees, and with a monthly repurchase plan. Blackstone's BREIT, launched in January 2017, set the template that Starwood, Brookfield, Apollo, KKR and others followed.
- What happened with BREIT's repurchases?
- From late 2022 investor repurchase requests exceeded the plan's 2 percent monthly and 5 percent quarterly caps, and BREIT prorated requests every month from December 2022 until early 2024, fulfilling a fraction of each request. It honored the plan's stated limits throughout, which is the point: the caps worked as designed, and investors who wanted out in full waited more than a year. February 2024 was the first month since November 2022 that every request was met in full.
- Why do non-traded REIT distributions exceed earnings?
- Because REITs distribute cash, not accounting income, and a non-traded REIT's cash can come from operations, borrowings or the proceeds of selling new shares. Depreciation makes GAAP net income a poor guide, so the industry reports funds from operations, but many programs pay distributions above even that and disclose that part of the distribution was funded by borrowings or offering proceeds. The tax character shows on the 1099-DIV: the portion labeled return of capital was not earned in that year.
- What is the difference between a registered non-traded REIT and a Regulation A REIT?
- A registered non-traded REIT files a Form S-11, reports quarterly on Form 10-Q and annually on Form 10-K with audited financial statements, and can raise unlimited amounts; it is sold mainly through broker-dealers and wirehouses with $2,500 to $1 million class minimums. A Regulation A Tier 2 REIT qualifies on Form 1-A, can raise at most $75 million in 12 months, reports semiannually on Form 1-SA and annually on Form 1-K, and files its NAV updates as Form 253G2 supplements; the online platforms use it because it allows $10 to $500 minimums and direct sale without a broker.
- What fees does a non-traded REIT charge?
- NAV REITs: a management fee of about 1.25 percent of NAV a year, a performance participation of 12.5 percent of total return above a 5 percent hurdle with a high-water mark, stockholder servicing fees of up to 0.85 percent a year on T and S shares (capped at roughly 8.75 percent of gross proceeds per share), and upfront selling commissions of up to 3.5 percent on those classes; I shares carry neither. Platform Reg A REITs charge lower headline fees, commonly 0.85 to 1 percent asset management plus acquisition or servicing fees at the deal level. Legacy lifecycle REITs charged 7 percent selling commissions, a 3 percent dealer manager fee and acquisition fees of 1 to 3 percent.