WASHINGTON, DC—Non-traded REITs would be required to provide more disclosure, and to provide it more often, under rule changes approved by the SEC. First proposed by the Financial Industry Regulatory Authority at the start of 2014, the changes now require broker-dealers to include a per-share estimated value for an unlisted direct participation program or REIT on customer statements. An earlier version of the proposal would have made disclosure of estimated values voluntary.

Finra’s proposal calls for one of two methodologies to be used in ensuring the reliability of these estimates: net investment or appraised value. In the former, the net investment would be based on the “amount available for investment” percentage shown in the offering prospectus, while the latter method requires a valuation of the assets and liabilities of the DPP or REIT in order to set a share value.

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