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NEW YORK CITY-Public REITs may have gotten the bulk of the attention this year, but the non-traded REIT sector has emerged as a formidable force in the investment arena. According to data compiled for the year by Real Capital Analytics, these vehicles are now the second-largest net investor group in 2009 among all property types, and are steadily attracting investor dollars as well.

No fewer than 12 investment managers are raising funds for unlisted REITs this year, accounting for more than $20 billion in capital–particularly from private and individual investors looking to place money into real estate. At this rate, the non-traded REIT pool will become almost as large, in terms of investment capital, as public REITs.

Whereas public REITs have sold some $10 billion in assets this year, unlisted REITs shed just $500 million overall, resulting in a net 2009 investment of $2.9 billion–second only to the developer and owner/operator group.

In the apartment market specifically, non-traded REITs increased their spending and market share this year. This marks a change from last year, when this group reduced its allocation to the sector significantly.

The cohort bought $821 million in apartments in 2009, and did not sell a single multifamily asset during that time. That means that in terms of net investment, non-traded REITs funneled the most capital into apartments. They increased their spending in the sector by 60% compared to 2008, and grew their acquisition market share over the same period by five percentage points, accounting for 6.3% of all multifamily deals that closed in 2009.

Two of the largest players were Behringer Harvard, based in Addison, TX, and Inland American Real Estate Trust of Oak Brook, IL. The pair were involved in the 10 largest apartment transactions by non-traded REITs this year. Inland American was behind the acquisitions of the 384-unit Grogan’s Landing in Spring, TX, for $35.3 million; the 320-unit Lake Wyndemere in Spring, TX, for $29.4 million; the 292-unit Alden Landing in Spring, TX, for $26.8 million; and the 308-unit Brazos Ranch in Rosenberg, TX, for $27.7 million.

For its part, Behringer Harvard has been investing significantly in apartments over the past year through its Behringer Harvard Multifamily REIT I Inc., currently a $2.5-billion vehicle led by chief operating officer Mark T. Alfieri. Among the deals it has closed this year are the $96-million purchase of the Gallery at NoHo Commons, a 438-unit complex in North Hollywood, CA; the $79.7-million buy of Waterford Place, a 390-unit property in Dublic, CA; the $46-million acquisition of the 140-unit Redwood Lofts in Los Angeles; and the $40-million purchase of Burroughs Mill, a 308-unit asset in Cherry Hill, NJ.

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