A six year non-traded REIT position that returned 2.4 percent a year after everything
Consider an investor who bought into a public non-traded REIT in 2018 through an advisor, 60k, Class A shares, diversified, heavy on suburban office and grocery-anchored retail with a smaller industrial piece. Upfront selling commission and dealer manager fee together took about 8.5% off the top, so the 60k bought roughly 54.9k of actual NAV on day one. A long hold was meant to amortize that load, which is true in principle but not guaranteed. Distributions ran 5.5% to 6.2% annualized on the offering price for the first three years, about 3.3k a year in cash. In 2020 the distribution was cut to 3.1% and stayed there for two years, then partially recovered to 4.4%. Total distributions across six years came to roughly 18.9k. The NAV story is where the position turned. Published NAV per share was 25.00 at purchase, peaked around 26.40 in 2019, and was 22.15 at repurchase last year. Office was the driver, and the sector allocation deserved more scrutiny than the word diversified alone provides. It was 41% office by NAV at purchase, a fact easy to miss without reading the schedule of investments directly. Repurchase took three quarters, prorated at roughly 40% each of the first two quarters because the plan hit its cap, clearing the rest in the third. NAV drifted down another 1.9% during that wait, so time in the queue cost real money on the back half. All in: 60k out, 18.9k in distributions, 53.1k returned on repurchase across three tranches, roughly 2.4% annualized before tax. The lessons: read the schedule of investments before the marketing material, treat sector mix as the whole decision rather than a detail, size any position assuming the exit takes a year, and ask what an 8.5% load actually buys, because in practice it often buys distribution, not diligence.
