CHARLOTTESVILLE, MD-For the most part, nontraded REITs haveflown under investors', indeed the industry’s, radar. Thatchanged last year when they, along with the theirpublicly-traded counterparts, began raising record levels ofcapital. Most observers had a pretty good idea of what the publiclytraded REITs would do with the funds that they raised, says ChrisHenderson, analyst at SNL Real Estate. "But it was an open questionwhat type of investments the nontraded REITs would make," he tellsGlobeSt.com.

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For instance, one question, still unanswered, is howmuch, if any, nontraded REITs would invest in distress, hesays. "We still don’t have a good handle on that, but that issomething we will be able to answer in time."

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Meanwhile, as these companies begin making acquisitions, SNL isgetting a preliminary sense of where their investment tastes lie,at least for this particular market cycle: Retail has been the mostcommonly purchased property type this year, with 89 acquisitions inthe sector, SNL reports. By contrast, the majority of publiclytraded REIT acquisitions have involved health care and officeproperties, with 33 and 29 purchases, respectively.

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"The interesting thing about nontraded REITs is that they havegravitated toward steady, cash-flowing asset classes likesingle-tenant retail," Henderson says. SNL also found thatwhile nontraded trusts have purchased more properties than theirpublicly traded counterparts so far in 2010, publicly traded REITshave spent approximately 35% more on acquisitions than thenontraded variety.

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