Blue Vault Partners and The University of Texas at Austin McCombs School of Business Collaborate on White Paper Discussing the Historical Performance of Nontraded REITs

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Blue Vault Partners, the first independent research firm to offer peer analysis and quarterly performance reporting of nontraded REITs, prepares to launch a study analyzing the total returns of all full-cycle events that have occurred in the industry since 1999.

Blue Vault Partners, in collaboration with the Real Estate Finance and Investment Center at The University of Texas at Austin’s McCombs School of Business, is preparing to release a study that compares the historical performance of nontraded REITs to those of publicly traded REITs and institutional direct real estate investments. The study sample includes those nontraded REITs that have experienced a full-cycle liquidity event between 1999 and 2012.

Nontraded REITs are public real estate investment trusts whose shares are issued directly by the sponsor and are not traded on a stock exchange. Full-cycle liquidity events typically occur within a seven to ten year time horizon and provide shareholders with the opportunity to receive cash for their shares. Full-cycle liquidity events are triggered when a nontraded REIT lists its shares on a public stock exchange, liquidates its portfolio through the sale of all individual properties, or is acquired by or merges with another entity.

Led by Jay C. Hartzell, Chair of the Department of Finance and Executive Director of the Real Estate Finance and Investment Center, The University of Texas has joined forces with Blue Vault Partners to complete this ground-breaking study. This project compliments previous research Dr. Hartzell has published on real estate investment trusts and alternative means of benchmarking real estate mutual fund performance.

“Dr. Hartzell has developed a world-class academic center at The University of Texas. Having the academic firepower of U.T., coupled with the research capabilities of Blue Vault Partners, has allowed us to examine nontraded REIT full-cycle returns and expand upon research other industry groups have conducted in the past.” stated David Steinwedell, managing partner, Blue Vault Partners. “But until now, the nontraded REIT industry has not received the benefit of university caliber research.”

“With $84 billion in assets, the nontraded REIT industry has become a substantial component of the public REIT market and the institutional commercial real estate investment universe,” stated Professor Hartzell. “This study has given us better insight into the key drivers of investment returns for nontraded REITs, and preliminary findings indicate that the timing of full-cycle liquidity events coupled with the property-sector exposures has a significant impact on investor returns.”

Founded in 2009, Blue Vault Partners was created for the purpose of providing unbiased research, education and enhanced transparency for the nontraded REIT industry. As part of an ongoing effort to increase the awareness of these investment vehicles, the study was designed to provide a better understanding of the long-term returns, risks and rewards associated with these types of real estate offerings. Initial results from the white paper will be released in May 2012 to current Blue Vault customers as part of their annual subscription benefits. Nonsubscribers who wish to purchase this study can request additional information directly from Blue Vault Partners by calling 877-256-2304.

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