Direct Answer
A non-traded REIT, also called a public non-listed REIT or private REIT, is a real estate investment trust that registers with the SEC and files periodic reports but does not list its shares on a stock exchange. Instead of a continuous market price, its value is typically set through periodic (often quarterly) net asset value (NAV) estimates, and liquidity comes from a share-repurchase program with limits rather than an open market.
Non-traded REITs share the basic REIT structure covered in Swoopr's Real Estate & REIT Investing hub, including equity-versus-mortgage economics, NOI, cap rate, FFO, and AFFO. This page focuses only on what is distinctly different about the non-traded structure itself: liquidity, pricing, and fees.
Key Takeaways
- A non-traded REIT is registered with the SEC and reports to it, but its shares are not listed on a national securities exchange.
- Share value is typically set through periodic, often quarterly, NAV estimates built from third-party appraisals, not a continuously quoted market price.
- Liquidity usually comes from a share-repurchase program with dollar or percentage caps, which the REIT's board can amend, suspend, or terminate at its discretion.
- Upfront fees have historically been substantially higher than buying a listed REIT or REIT index fund through a brokerage account.
- The trade-off is real: reduced day-to-day price volatility in exchange for illiquidity, valuation opacity between appraisals, and a higher cost structure.
What Makes a Non-Traded REIT Different From a Listed REIT?
Both structures are REITs in the tax sense: each must distribute most of its taxable income to shareholders to qualify for REIT tax treatment, and both can be equity or mortgage focused. The difference is entirely in how the shares change hands and how their value is observed.
- Not exchange-listed. A publicly traded REIT's shares trade on a national securities exchange throughout the trading day. A non-traded REIT's shares are not listed anywhere; an investor generally buys through a broker-dealer or investment platform at an offering price or current NAV, not through an open order book.
- Periodic pricing instead of continuous pricing. A listed REIT's price updates constantly as the market trades it. A non-traded REIT's per-share value is typically recalculated on a periodic schedule, commonly quarterly for NAV REITs, based on appraisals and other portfolio data rather than live trading.
- Share-repurchase programs instead of market liquidity. A listed REIT investor can sell to any buyer at the prevailing market price. A non-traded REIT investor generally depends on the REIT's own repurchase program, which caps how much can be redeemed in a given period and can be limited, gated, or suspended by the board.
Why Do Non-Traded REITs Exist?
Non-traded REITs are marketed as a way to hold institutional-style, income-producing real estate without the day-to-day price swings of an exchange-listed security. Because the reported share value moves only when the periodic NAV is recalculated, it does not reflect the intraday and day-to-day volatility that public equity markets apply to listed REITs, even when the underlying properties themselves are fundamentally similar.
That smoother appearance is not the same as lower real risk. The underlying properties are still exposed to the same vacancy, tenant, interest-rate, and property-cycle risks covered in the hub's real-estate investment risks section. What an investor is actually giving up in exchange for that smoother-looking price is liquidity: the ability to exit the investment on their own schedule at an observable market price.
How Are Non-Traded REIT Fees Structured?
Non-traded REITs have historically carried a materially different, and generally higher, fee structure than buying a listed REIT or REIT index fund through a brokerage account. The Investor.gov: Investor Bulletin, Non-traded REITs notes that upfront fees, including sales commissions and offering costs, can represent up to 15 percent of the offering price. That amount is deducted before the investor's money is put to work, which lowers the effective amount actually invested in real estate relative to the price paid.
Beyond the upfront load, non-traded REITs can also carry ongoing costs such as asset management fees and property-level acquisition and transaction fees, on top of the same operating expenses any REIT incurs. Because these structures are often externally managed, an investor should also check who is compensated and how, since that can create incentives that do not always align with shareholder returns. None of these figures are universal. Fee levels and structures vary by offering, so an investor should read the specific REIT's prospectus rather than assume a single fee schedule applies across the industry.
How Is a Non-Traded REIT's NAV Determined?
A listed REIT's price is set continuously by the market, moment to moment, as buyers and sellers transact. A non-traded REIT has no such market, so its reported per-share value instead depends on periodic third-party appraisals of its properties and other portfolio inputs, commonly refreshed quarterly for REITs that describe themselves as NAV REITs. Some older non-traded REIT structures instead use a fixed offering price that is updated only infrequently rather than a regularly recalculated NAV, so the pricing model itself varies by offering.
This periodic-appraisal approach means the reported value between updates does not necessarily reflect current market conditions the way a listed security's price does. An appraisal is also an estimate, not an observed transaction price, so the same due-diligence caution that applies to listed-REIT NAV estimates in the hub's NAV and market price section applies here too, with less frequent updates and no independent market price to check it against in the meantime.
What Are the Risks of Non-Traded REITs?
- Liquidity risk. Share-repurchase programs are typically capped and can be limited, gated, or suspended at the REIT's discretion, including during periods of market stress when investors most want to redeem. An investor may be unable to access their investment on their own timeline.
- Valuation opacity. Periodic appraisal-based NAV updates, often quarterly, provide far less frequent and less independently verifiable pricing than a continuously quoted market price, making it harder to assess current value or performance between updates.
- Higher cost load. Historically higher upfront fees and ongoing asset management and transaction costs than a listed REIT or REIT index fund can meaningfully reduce net returns before any property-level performance is even considered.
- Distribution sourcing risk. As with any REIT, distributions that are not fully covered by operating cash flow can be paid partly from offering proceeds or borrowed funds rather than property income, which is not sustainable indefinitely.
- Conflicts of interest. Many non-traded REITs are externally managed, which can create compensation structures for the sponsor or manager that do not automatically align with shareholder outcomes.
Non-Traded REITs vs. Listed REITs
| Dimension | Non-traded REIT | Exchange-listed REIT |
|---|---|---|
| Where shares trade | Not listed on an exchange | National securities exchange |
| Pricing | Periodic NAV estimate, often quarterly, or an infrequently updated fixed price | Continuous market price throughout the trading day |
| Liquidity | Limited share-repurchase program, subject to caps and board discretion | Ordinary exchange liquidity, subject to market conditions |
| Typical upfront fees | Can represent up to 15 percent of the offering price, per SEC guidance | Standard brokerage commission or spread |
| Reported price volatility | Low, because it only moves when NAV is recalculated | Can be sharp, because it prices continuously |
| Underlying property risk | Same property, tenant, and rate risks as any REIT | Same property, tenant, and rate risks as any REIT |
Lower reported price volatility is a byproduct of infrequent pricing, not evidence that the underlying real estate is actually less risky.
Frequently Asked Questions
What is a non-traded REIT?
A non-traded REIT, also called a public non-listed REIT or private REIT, is a real estate investment trust that registers with the SEC and files regular reports like a publicly traded REIT, but does not list its shares on a stock exchange. Its shares generally cannot be bought or sold on the open market the way a listed REIT's shares can.
How is a non-traded REIT priced if it doesn't trade on an exchange?
Because there is no continuous market price, a non-traded REIT's share value is typically based on periodic, often quarterly, estimates of net asset value (NAV) built from third-party appraisals of its properties and other portfolio inputs. Some non-traded REITs price shares at a fixed offering price instead and update that price only infrequently, so investors should check which model a specific REIT uses.
Can I sell my shares in a non-traded REIT whenever I want?
Generally no. Non-traded REITs commonly offer a share-repurchase program instead of exchange liquidity, and these programs typically cap the dollar amount or percentage of shares repurchased in a given period. The REIT's board can also amend, suspend, or terminate the program at its discretion, including during periods of market stress, which can leave an investor unable to redeem shares when they most want to.
Are non-traded REIT fees higher than listed REIT funds?
Non-traded REITs have historically carried higher upfront costs than buying a listed REIT or REIT index fund through a brokerage account. The SEC's investor bulletin on non-traded REITs notes that upfront fees can represent up to 15 percent of the offering price, on top of ongoing asset management and property-level fees, all of which reduce the amount actually invested and the REIT's effective return.
What eventually happens to a non-traded REIT?
A non-traded REIT is generally structured as a finite vehicle. Its sponsor typically plans a liquidity event, such as listing the REIT's shares on an exchange, selling the company, or liquidating its properties and distributing proceeds, within a stated time horizon. Until that event occurs, investors depend on the REIT's limited share-repurchase program for any liquidity, and the timing of a liquidity event is not guaranteed.
How are non-traded REITs distributed to investors?
Through intermediaries rather than on an exchange, historically via broker-dealers and financial advisers who receive selling compensation from the offering. That distribution model is the source of much of the upfront cost structure, since the commissions and offering expenses are paid out of investor capital before it is deployed into property. It also means the product reaches investors through a recommendation rather than through a decision to buy something already listed and priced.
What is the difference between a non-traded REIT and a private REIT sold under Regulation D?
The registration status. A non-traded REIT registers its offering with the Securities and Exchange Commission and files periodic public reports, so its financials, fees and property details are publicly available even though the shares do not trade. A private REIT relying on an exemption such as Regulation D is not publicly reporting and is generally limited to accredited investors, so far less information is available to anyone assessing it.
How does a non-traded REIT report performance?
Through a periodically published net asset value per share and its distribution history, rather than through a market price. That combination understates volatility relative to a listed vehicle, because appraised values move smoothly, and it can also obscure the effect of upfront costs: the value at which shares were sold and the first published valuation can differ meaningfully. Total return calculations need both components and the entry price actually paid.
How do daily-valued non-traded REITs differ from the older lifecycle structure?
The older model raised capital over a defined offering period, held property, and pursued a liquidity event such as a listing or sale after a number of years. Newer perpetual structures publish a net asset value on a regular cycle, offer continuous subscription, and provide a limited repurchase facility instead of a terminal liquidity event. The repurchase capacity is capped, so the redemption route can be constrained precisely when many holders want it.