Click here for the digital edition.

At the end of September, Phoenix-based Cole Real Estate Investments filed two registration statements with the Securities and Exchange Commission: one for Cole Advisor Retail Income REIT, the other for Cole Advisor Corporate Income REIT. The offering for each was up to $3.5 billion, for an aggregate $7 billion.

Cole is a non-traded REIT—one of the most prolific, in fact, in terms of fundraising. Yet the capital markets met its announcement with the barest of acknowledgements. By contrast, if a publicly traded REIT made a play for a capital raise of $7 billion, the market would still be talking about it weeks later, says Keith D. Allaire, managing director and head of Robert A. Stanger & Co.’s Financial Advisory Services Group.

To state the obvious, there are key differences between non-traded and publicly traded REITs: how they raise capital and from whom, as well as how that capital is invested and how those investors are repaid.

In this particular example, $3.5 billion is the highest amount Cole thinks it can realize, though there is no guarantee that it will. The offering can be extended for as long as three years and is not dependent on the ups and downs of the equity market; no non-traded REIT would shelve a planned offering because the market suddenly turned, as many publicly traded REITs have done. 

Until recently, these differences hardly mattered, since non-traded REITs were just a blip on the investment radar screen. But now these vehicles are pulling in unprecedented volumes of capital from investors intrigued by their ROI and stability, especially in light of the wild gyrations of the stock market.