Table of Contents
Public REITs vs. Public Non-Listed REITs vs. Private REITs
Real Estate Investment Trusts (REITs) come in three broad varieties—publicly traded, publicly registered non-listed, and private—each offering distinct structures, liquidity profiles, fee burdens, and investor requirements. This article provides a comprehensive comparison, illustrating how these vehicles operate, who they serve, and their relative advantages and drawbacks.
1. Publicly Traded REITs
Publicly traded REITs are listed on major stock exchanges (e.g., NYSE, NASDAQ) and are subject to the full rigors of Securities and Exchange Commission (SEC) oversight.
1.1 Availability of information
These REITs register with the SEC under the Investment Company Act and must file quarterly (10-Q) and annual (10-K) reports, ensuring transparent disclosure of holdings, financials, and risk factors (corporatefinanceinstitute.com). Since publicly traded REITs are traded in public securities exchanges, there is easy access to performance information about the shares of a public REIT. The information is provided by the company that owns and trades the REITs, as well as independent firms that actively analyze REITs.
Also, REITs are registered and regulated by the SEC, which requires them to file their audited financial statements with the regulatory body. Interested investors can then access the information on the SEC website.
1.2 Who can invest
Individual and institutional investors can buy and sell shares of a publicly-traded REIT with a minimum investment of one share and the current share offering price. When buying through brokers, investors are charged an upfront fee, and the fee would be the as same as they would pay in any other public REIT.
1.3 Minimum investment
The minimum investment for a publicly traded REIT is pretty modest. However, the initial investment may vary from company to company.
1.4 Liquidity and Pricing
Shares trade intraday at market prices, allowing investors to buy or sell positions instantly. This high liquidity contrasts sharply with non-listed and private REITs, as shares can be executed at prevailing bid-ask spreads without lock-ups or redemption windows (reit.com). Investors can easily buy and sell shares of a publicly traded REIT at a relatively low price since the REITs are traded on the major securities exchanges. Shareholders can readily get in and exit the marketplace effortlessly, compared to private REITs, which are less liquid.
1.5 Fee Structure
Operating expenses for public REITs (as reflected in fund-level expense ratios for REIT ETFs) typically run between 0.25 % and 0.68 % of assets under management, covering fund administration, management fees, and exchange listing costs; no upfront sales loads apply (ssga.com, alpsfunds.com).
1.6 Advantages and Risks
While daily pricing fosters flexibility, it also exposes shares to market volatility and sentiment swings. Public REITs often trade at premiums or discounts to Net Asset Value (NAV), driven by interest-rate expectations and macroeconomic factors.
1.7 Examples
- Realty Income Corporation (O) – Known as “The Monthly Dividend Company,” Realty Income owns over 11,000 retail and commercial properties under long-term net leases Realty Income.
- Prologis, Inc. (PLD) – The world’s largest logistics REIT, specializing in high-barrier distribution centers for e-commerce and supply-chain tenants Prologis.
- American Tower Corporation (AMT) – A leading global owner and operator of wireless and broadcast communication sites, with over 210,000 towers worldwide American Tower.
- Simon Property Group, Inc. (SPG) – The largest mall and premium outlet owner, operating 200+ properties in North America and Asia Simon Property Group.
2. Publicly Registered Non-Listed REITs
Public non-listed REITs (PNLRs) register with the SEC but do not list on an exchange. They blend features of both public and private vehicles.
2.1 Availability of information
PNLRs file the same disclosure documents as traded REITs—prospectuses, 10-Ks, and 10-Qs—but shares are issued and redeemed directly through the sponsor rather than via an exchange (reit.com).
2.2 Who Can Invest
Public non-listed REITs (PNLRs) are generally available to a broad spectrum of investors—both accredited and non-accredited—so long as they purchase shares through a participating broker-dealer or financial advisor. Unlike private REITs, which are limited to qualified institutional and accredited investors under the Securities Act of 1933, PNLRs do not impose an explicit accredited-only requirement. Instead, broker-dealers apply “suitability” standards to ensure that an investment in a non-listed REIT aligns with an investor’s financial profile, investment objectives, and risk tolerance. Additionally, because PNLR offerings are registered with the SEC but not exchange-traded, they must undergo state “Blue Sky” reviews, meaning investors in each state must meet any local requirements imposed by state securities regulators (investopedia.com, reit.com).
2.3 Minimum Investment
Minimum initial investments in public non-listed REITs typically range from $1,000 to $25,000, although sponsor-by-sponsor variations exist. Some PNLRs offer “daily NAV” share classes with lower thresholds—sometimes as low as $1,000–$2,500 (reit.com)—to attract a wider retail audience, while others targeting more committed investors may set minimums of $25,000 to $50,000 or higher. These minimums reflect the balance between broadening access and ensuring sufficient capital per investor to cover offering costs and maintain operational efficiencies (icapital.com).
2.4 Liquidity and Pricing
Liquidity is typically provided through limited redemption programs, which may only allow 5 % of outstanding shares to be repurchased per quarter or require multi-year holding periods. Some “Daily NAV” offerings permit periodic redemptions at NAV, albeit with caps and potential fees (reit.com).
2.5 Fee Structure
Non-listed REITs often levy upfront sales commissions of up to 7 % of the offering proceeds and annual asset-management fees in the 1.0 %–2.0 % range; these higher fees compensate sponsors for maintaining periodic redemption facilities and additional marketing efforts ( reit.com).
2.6 Advantages and Risks
The principal benefit of PNLRs is access to professionally managed real-estate portfolios without the short-term volatility of public markets. However, limited liquidity and elevated fees can erode total returns, and periodic NAV pricing may lag actual market conditions.
2.7 Examples
- Blackstone Real Estate Income Trust (BREIT) – A non-traded REIT offering diversified exposure to U.S. core and core-plus properties across sectors Blackstone.
- Starwood Real Estate Income Trust (SREIT) – Invests in stabilized, cash-flow properties with a focus on industrial and office assets Starwood Capital.
- Griffin Capital Essential Asset REIT (NYSE: EARN) – Non-traded REIT specializing in mission-critical properties like single-tenant industrial and infrastructure Griffin Capital.
- Nuveen Real Estate Income Fund (JRS) – Provides periodic NAV redemptions and income through a diversified U.S. real-estate portfolio Nuveen.
3. Private REITs
Private REITs are neither exchange-listed nor publicly registered. They operate under the general REIT tax provisions but offer shares directly to qualified investors. Private REITs, also known as private placement REITs, are REITs that are exempted from registration with the Securities and Exchange Commission (SEC), pursuant to Regulation D of the Securities Act of 1933. It means that they are not regulated by the SEC, and their shares are not listed on public securities exchange markets such as the New York Stock Exchange (NYSE).
3.1 Availability of information
Since private REITs are not traded in stock markets, there is little to no public or independent performance data that investors can use to track the share price. Also, they are not regulated by the Securities and Exchange Commission, and hence, they are not required to file their annual financial statements with the federal agency. Only investors who have invested in private REITs can get performance information from internal sources. (corporatefinanceinstitute.com)
3.2 Who can invest
The Securities Act of 1933 permits private REITs to sell securities to qualified institutional investors and accredited investors. Institutional investors are organizations that invest on behalf of their members and are assumed to have more specialized knowledge and, therefore, are able to protect themselves. They include pension funds, hedge funds, insurance companies, endowment funds, etc.
On the other hand, accredited investors are individual investors who are worth at least $1 million (excluding their primary residence), or have earned an annual income exceeding $200,000 over the previous two years. (corporatefinanceinstitute.com)
3.3 Minimum investment
Private REITs offered to retail investors require a minimum initial investment of at least $10,000 to $100,000. However, the upfront cost requirements may vary from company to company. (corporatefinanceinstitute.com)
3.4 Liquidity and Pricing
No formal liquidity mechanisms exist; investors typically can only exit through share redemptions—if offered—or secondary transactions, which are rare and often heavily discounted. Lock-up periods of five to seven years are standard (skylinewealthmanagement.ca). Private REITs are not traded in public security exchanges, and are, therefore, not liquid. If an investor wants to pull out before a liquidation event, they must go through redemption programs for shares, which are either limited, non-existent, or subject to change. They differ from public REITs, which can be bought and sold with ease since they are traded on a public security exchange.
3.5 Fee Structure
Private REITs generally impose upfront placement or sales commissions of 9 %–10 % of invested capital and annual management fees exceeding 2.0 % of AUM; performance fees (carried interest) may also apply, aligning sponsor compensation with NAV appreciation (investor.gov, reit.com).
3.6 Advantages and Risks
Potential advantages include access to off-market deals, greater alignment with sponsor interests via carry structures, and tailored investment mandates. Nonetheless, the absence of price discovery, high fees, and structural illiquidity significantly increase risk, particularly if capital markets tighten or property valuations decline (edwardjones.com).
3.7 Examples
- Blackstone Property Partners – A private vehicle focusing on large-scale, value-add commercial real estate investments globally Blackstone.
- Jamestown L.P. – Specializes in mixed-use properties and adaptive-reuse developments, including Ponce City Market in Atlanta Jamestown.
- Walton Street Capital – Invests in opportunistic and value-add strategies across U.S. real estate sectors, targeting high-growth markets Walton Street.
- CIM Group – A private real estate owner-operator with a diversified portfolio of office, retail, and residential assets CIM Group.
4. Direct Comparison Overview
| Feature | Public REITs | Public Non-Listed REITs | Private REITs |
|---|---|---|---|
| Exchange Listing | Yes (NYSE, NASDAQ) | No | No |
| SEC Registration & Filings | Full SEC reporting (10-K, 10-Q, 8-K) | Full SEC reporting | Exempt; limited public disclosures |
| Liquidity | Daily market trading | Periodic redemptions (e.g., quarterly caps) | Minimal; often none |
| Pricing | Market price; NAV transparency | NAV-based, periodic | NAV-based, sponsor set |
| Upfront Fees | None | Sales loads up to 7 % | Placement fees up to 10 % |
| Annual Fees | 0.25 %–0.68 % of AUM | 1.0 %–2.0 % of AUM | > 2.0 % of AUM (+ carry interest) |
| Investor Eligibility | Retail and institutional | Accredited and semi-institutional | Accredited only |
| Transparency | High; public filings & analyst coverage | High; public filings, no daily quotes | Low; private reporting |
| Typical Hold Period | None | 5–7 years (with partial liquidity options) | 5–10 years (lock-up) |
| Minimum Investment | Depends, usually $1,000 to about $2,500 per share |
Typically range from $1,000 to $2,500 |
At least $10,000 to $100,000 |
5. Choosing the Right REIT Structure
Selecting among publicly traded, publicly non-listed, and private REITs hinges on five key considerations. Below, we break these down into focused subheadings to guide your decision:
5.1 Assessing Liquidity Needs
Investors must first determine how quickly they may need to convert real-estate holdings back into cash.
- Daily Trading Publicly traded REITs offer intraday liquidity at market prices, enabling swift portfolio adjustments without redemption caps .
- Periodic Redemptions Public non-listed REITs provide limited liquidity—often capped at 5% of outstanding shares per quarter or through scheduled NAV redemptions with notice periods—making them moderately liquid but unsuitable for investors requiring instant access .
- Long-Term Lock-Ups Private REITs typically enforce multi-year lock-up periods (5–10 years) with few secondary-market options, ideal only for those with capital they can afford to leave untouched for the long haul .
5.2 Evaluating Fee Structures
Fees can significantly erode returns over time, so understanding cost differentials is critical.
- Expense Ratios (0.25%–0.68%) Public REITs, like REIT ETFs, carry the lowest ongoing fees—often under 0.70% of AUM—because there are no sales loads or redemption facilities to maintain .
- Sales Loads & Management Fees (1.0%–2.0%) Public non-listed REITs may impose upfront commissions up to 7% plus annual management fees between 1% and 2%, covering liquidity programs and marketing costs .
- Placement Fees & Carried Interest (>2.0%) Private REITs often charge placement fees of 9%–10% and annual fees above 2%, with potential performance or carried-interest fees that reward sponsors only if NAV grows .
5.3 Aligning Return Objectives
Different REIT structures suit varying return profiles and risk tolerances.
- Income & Total Return Public REITs deliver predictable dividend yields (typically 3%–5%) plus price appreciation aligned with broader markets. They suit investors seeking balanced income and growth with transparent pricing .
- NAV-Focused Stability Public non-listed REITs aim to smooth NAV volatility by avoiding daily market swings, appealing to those who prioritize steady NAV growth and regular dividends over short-term capital gains .
- Specialized Alpha Private REITs target niche or value-add opportunities (e.g., development projects, opportunistic strategies) that may offer higher returns—but with commensurately higher risk and illiquidity .
5.4 Access to Specialized Strategies
Not all REIT structures grant equal access to certain property types or strategies:
- Broad Market Exposure Public REITs provide liquid access to core and core-plus assets across sectors (industrial, office, healthcare) via single-entity or ETF wrappers .
- Moderate Illiquid Niches Public non-listed REITs sometimes include specialized mandates—such as net-lease portfolios or mortgage strategies—with limited liquidity buffers .
- Highly Tailored Mandates Private REITs offer bespoke exposure to value-add, opportunistic, or private-market transactions (e.g., ground-up developments or distressed acquisitions) unavailable through public vehicles .
5.5 Investor Suitability & Eligibility
Finally, match the structure to your accreditation status and investment horizon:
- Retail Investors Anyone can buy publicly traded REITs through a brokerage account with no minimums beyond the share price.
- Semi-Institutional & Accredited Public non-listed REITs require suitability assessments and minimum investments (often
$2,500–$25,000), but are open to non-accredited retail investors in many cases . - Accredited Only Private REITs are typically restricted to accredited investors and institutions (e.g., pension funds, endowments), reflecting the complexity and illiquidity of these offerings under Regulation D .
6. Conclusion
Publicly traded REITs offer unmatched liquidity and low ongoing fees (0.25%–0.68% of AUM) with daily pricing and full SEC transparency, making them ideal for investors seeking cost-efficient, flexible exposure to real estate income and growth. Public non-listed REITs provide NAV-based pricing and limited redemptions (typically capped at 5% quarterly) in exchange for higher fees (up to 7% sales loads and 1.0%–2.0% annual asset-management fees), appealing to those willing to trade some liquidity for reduced market volatility. Private REITs, reserved for accredited investors, carry the highest fees (9%–10% placement plus >2.0% annual) and multi-year lock-ups but enable access to bespoke, value-add strategies unavailable in public vehicles.
Choosing the right structure depends on your liquidity needs, fee tolerance, return objectives, and investor status. If you need intraday flexibility and minimal costs, stick with publicly traded REITs. If you can accept periodic illiquidity and higher fees for steadier NAV growth, consider a public non-listed REIT. For long-term, specialized investments and if you meet accredited-investor criteria, private REITs may deliver the highest potential returns—albeit with elevated risk and limited transparency.