New Rule Means Closer Look at Non-Traded REITs

NEW YORK CITY—A year ago, United Realty Trust Inc.’s Jacob Frydman went on record with the SEC in support of a regulatory change by the Financial Industry Regulatory Authority that would force greater transparency in reporting by non-traded REITs such as his. “We view this proposal not only as a way to provide investors and investment advisors with greater visibility into the actual costs associated with their investment, but also as a way to compare and contrast differing sponsors based on their performance and the investment strategies they are pursuing,” Frydman, URTI’s chairman and CEO, wrote last March.

Specifically, FINRA Rule 2014-006 will require non-traded REITs to report per share NAVs that are calculated on a periodic basis using a methodology that conforms to standard industry practice. Last month, URTI published its initial NAV of $12.51 per share, an increase of 19.7% over the initial $10.45 offering price for its shares.