What Are Non-Traded REITs?
Non-traded real estate investment trusts (REITs) are registered investment vehicles that invest in real estate assets. Also known as public non-traded REITs, non-listed REITs, or NAV REITs, these vehicles are not listed on public exchanges and are generally considered illiquid. Investors typically purchase non-traded REITs through broker-dealers or advisors.
Although they are not available on exchanges, most non-traded REITs are registered with SEC and must file regular reports.1 Like all REITs, non-traded REITs must comply with IRS rules requiring them to distribute at least 90% of their taxable income to shareholders annually.2
These structures may appeal to advisors seeking income and diversification while potentially providing direct exposure to private or commercial real estate assets, including multi-family housing, industrial property, and office buildings.
They are also gaining traction among investors—the non-traded REIT industry raised an estimated $2.08 billion in the first quarter of 2025, up from $1.72 billion in the fourth quarter of 2024 and $1.38 billion in Q3 2024.3
What Do Non-Traded REITs Typically Invest In?
Non-traded REITs, like other REITs, invest in real estate across sectors. Some non-traded REITs specialize in a single sector, while others diversify across property types and industries. REITs may invest in sectors such as:
Residential: apartment buildings, condominiums
Commercial: hotels, self-storage centers, office buildings, retail centers
Industrial: warehouses, factories
Infrastructure: data centers, telecom facilities
Healthcare: healthcare facilities, long-term care facilities
Because they typically focus on income, non-traded REITs often target “core” real estate properties with relatively stable cash flows collected as rent from tenants.4 Some non-traded REITs invest in mortgage assets, deriving cash flows from interest payments instead of rent.
How Do Non-Traded REITs Work?
Investors typically purchase shares in non-traded REITs through an advisor or broker-dealer. Subscriptions are often available on a regular schedule, typically monthly.5 Shareholders may receive periodic dividends, and many non-traded REITs offer periodic redemption programs. However, neither distributions nor redemptions are guaranteed, and both can vary based on the REIT’s offering terms. It is important for advisors to understand redemption limits, penalties, or gates that may apply for each offering.
What’s the Difference Between Non-Traded REITs and Publicly Traded REITs?
The primary differences between non-traded REITs and publicly traded REITs are how shares are valued and the liquidity available to investors. Investors can buy and sell publicly traded REITs at any time on public exchanges. Like stocks, their share prices reflect market demand and are susceptible to broader market volatility. Non-traded REITs, by contrast, may experience less day-to-day volatility as they do not trade on public exchanges.6 However, lower daily volatility does not necessarily reflect a non-traded REIT's true valuation or performance.7
Some non-traded REITs, often called life cycle REITs, do not provide periodic redemptions. Instead, investors may only gain at the end of a set period, when the REIT’s underliers are sold or if the REIT eventually lists on a public exchange.8 Institutional investors and accredited investors may also access private REITs, which differ from both non-traded and publicly traded REITs. Private REITs are exempt from SEC registration and are generally illiquid, less transparent, and potentially more expensive for investors than public REITs.9
What Are Potential Benefits of Non-Traded REITs
Potentially Higher Income Yields
Non-traded REITs often target higher distribution yields than their publicly traded counterparts, aiming to deliver an illiquidity premium.
Reduced Volatility
As the name implies, non-traded REITs do no trade on public markets, so their NAV does not fluctuate daily with market sentiment or volatility.10
Diversification
These strategies provide direct real estate exposure, which can diversify approaches beyond traditional stocks and bonds.
Potential Inflation Hedge
Historically, real estate has acted as a hedge against inflation, as property values and rents can increase over time.11
What Are Some of the Costs and Risks Associated With Non-Traded REITs?
There are costs and risks associated with investing in non-traded REITs, including some outlined below.
Lack of Liquidity
Non-traded REITs are generally illiquid investments, which may require shareholders to hold shares until a liquidity event or redemption opportunity. These REITs typically limit redemptions in both frequency and amount and can suspend or terminate redemption programs at any time.12 Investors may also need to redeem shares at a discount to their principal investment, potentially reducing returns.
High Fees
Non-traded REITs often have higher upfront fees than many exchange-traded products, sometimes reaching up to 15% of the offering price.13
Source of Distributions
Distributions are a reason many advisors may consider non-traded REITs. However, especially early in the life cycle, some distributions may come from borrowing or return of principal rather than investment operations.
Lack of Transparency
Valuations of non-traded REITs, and their underlying assets, may be less transparent than those of publicly traded REITs, which reflect market pricing.14
Conflicts of Interest
Non-traded REITs can be managed by external advisors, which may create incentives that do not fully align with shareholders’ goals.
