WASHINGTON, DC—Non-traded REITs would berequired to provide more disclosure, and to provide it more often,under rule changes approved by the SEC. Firstproposed by the Financial Industry RegulatoryAuthority at the start of 2014, the changes now requirebroker-dealers to include a per-share estimated value for anunlisted direct participation program or REIT on customerstatements. An earlier version of the proposal would have madedisclosure of estimated values voluntary.

Finra's proposal calls for one of two methodologies to be usedin ensuring the reliability of these estimates: net investment orappraised value. In the former, the net investment would be basedon the “amount available for investment” percentage shown in theoffering prospectus, while the latter method requires a valuationof the assets and liabilities of the DPP or REIT in order to set ashare value.

Under the net investment methodology, Finra members would haveto indicate in customer account statements that part of the sharedistribution includes a return of capital. The statement must alsomention that “any distribution that represents a return of capitalreduces the estimated per-share value shown on your accountstatement.”