Non-traded REITs are real estate investment trusts that sell shares to the public without listing them on a stock exchange. There is no daily market price and no ready buyer, so an investor who wants out usually depends on the REIT's own share repurchase plan. That plan has limits. In a Form 8-K filed with the SEC on June 3, 2026, one non-traded REIT said it had reached its redemption cap for the year and would redeem no shares from June 1 to November 30, 2026. Requests it could not meet roll into a window that opens on December 1, 2026.
The filing shows how the category works. A non-traded REIT replaces a market price with an estimated value per share, and a stock exchange with a repurchase plan its board can limit or suspend. A U.S. investor weighing one should read three things first, namely the repurchase terms, the valuation method and the source of the distributions. Each is disclosed in documents filed with the SEC, and each shapes how this route compares with others in the U.S. real estate market.
Non-Traded REITs Compared With Listed REITs and Private Deals
A REIT is a company that owns or finances income-producing real estate and passes most of its income to shareholders. A listed REIT trades on an exchange, so its shares can usually be sold on any trading day, at a market price that can move above or below the value of its buildings. A non-traded REIT also registers its offering with the SEC and files reports, but its shares never reach an exchange.
A private real estate offering sits further along the same line. It is sold under an exemption from SEC registration, often to accredited investors only, and usually funds one property or a small group of them. Many have no repurchase plan at all, so investors are paid out mainly when the property is sold or refinanced. No route is better in itself, because each trades a different mix of price visibility, liquidity, cost and concentration.
Non-traded REITs themselves come in two designs. Older programs sold shares at a fixed price during a long offering and planned to list or sell after a set number of years. Newer NAV REITs, as the law firm Goodwin described them in January 2026, publish a net asset value monthly or quarterly and offer regular repurchases at that value.
Non-Traded REIT Liquidity Runs Through the Repurchase Plan
The NASAA guidelines that state securities regulators apply to REIT registrations state the basic point. "Ordinarily, the REIT is not obligated to repurchase any of the SHARES." The SEC's staff has observed that non-traded REITs "generally have broad discretion to amend, suspend or terminate" their redemption programs.
In practice, plans cap how much can be redeemed in a month, a quarter or a year. When requests exceed the cap, the REIT may fill them pro rata or defer them to a later window. According to Goodwin, from late 2022 several large NAV REITs received repurchase requests that "consistently exceeded" their limits. Many have since cleared the backlog, but the episode showed that limits bind exactly when the most investors want to leave.
Non-traded REIT redemptions carry other terms too. Goodwin notes that most NAV REITs redeem shares held for less than a year at a discount to the stated value. These terms sit in the prospectus and can change, so what matters is the version in force when an investor asks to leave.
How the Estimated Value Per Share Is Set
With no market price, the value an investor sees is an estimate. FINRA Rule 2310 bars brokers from taking part in a public REIT offering unless the issuer agrees to disclose a per share estimated value, how it was developed and its date. Within 150 days after the second anniversary of breaking escrow, that value must rest on valuations of the REIT's assets and liabilities made at least annually.
FINRA gave the reason in Regulatory Notice 15-02 of January 5, 2015. The offering price "often remains constant on customer account statements" even after costs have reduced the money actually invested. Statements must now say that the shares are not listed and are generally illiquid, and that a customer able to sell may receive less than the estimated value.
Even a rule-based estimate has limits. Appraisals look backward, properties are valued at intervals, and the REIT chooses its methods within the rules. Without a trading market, in the SEC staff's words, "investors must make their own assessment" of how the offering price relates to the value of the shares.
Where the Distributions Come From
A regular distribution can look like rental income without being so. In its disclosure guidance on non-traded REITs, the SEC staff noted that these REITs "often pay distributions in excess of GAAP cash flow from operations and/or earnings", especially in their early years. The staff asks them to disclose the source of the shortfall, such as offering proceeds or debt.
A distribution funded that way hands back part of the investor's own money or adds borrowing, and the staff lists such payments among the causes of dilution. FINRA requires an account statement showing an early, cost-based value to flag any return of capital prominently, in words beginning "Part of your distribution includes a return of capital." The prospectus and periodic reports show how much of each year's distributions came from operations.
Costs shape the same picture. Sales charges, dealer manager fees and other offering expenses come out of the money raised, which is why FINRA's early valuation method starts from the amount actually available for investment. Many non-traded REITs are also run by an advisor, a separate firm that directs their daily business and is paid by the REIT. The NASAA guidelines give a full section to the conflicts this creates, including limits on buying property from the sponsor or advisor.
Risks and Limits of Non-Traded REITs
The first risk is illiquidity. An investor may be unable to sell for months or years, and a plan can be cut back or suspended without the investor's consent. A sale outside the plan, where one is possible at all, may bring less than the stated value.
Property values can fall, distributions can be reduced or stopped, and debt magnifies both. The estimated value may lag the market in either direction, so an investor who redeems at a stale value can gain or lose by it. Fees taken at the start and over the life of the REIT reduce what is left for the properties.
State rules also address concentration. Under the NASAA guidelines amended on September 7, 2025 and effective January 1, 2026, an investor's total holdings in non-traded REITs and similar programs generally may not exceed 10 percent of liquid net worth, unless a state administrator decides otherwise. The limit generally does not apply to accredited investors, who must judge concentration for themselves.
Reading a Non-Traded REIT From the Exit Backward
A non-traded REIT is easiest to understand from the end. The repurchase plan decides how and when an investor can leave, and the valuation method decides at what price. The source of distributions shows whether the payments along the way came from the buildings, and fees and the advisor's conflicts bear on all three.
The same tests apply to any illiquid real estate route, including private offerings with no repurchase plan, and they sit beside the property and debt questions in any review of U.S. property types and their risks. On Raveum, participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and U.S. investors receive K-1s. Eligible investors can review how verified accredited investors invest through Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently Asked Questions
What Is a Non-Traded REIT?
A non-traded REIT is a real estate investment trust that registers its offering with the SEC and files reports but does not list its shares on a stock exchange. Investors buy directly in a continuous offering, see an estimated value rather than a market price, and usually exit through a share repurchase plan with limits.
Can You Sell a Non-Traded REIT on the Secondary Market?
Sometimes, but rarely with ease. The shares are not listed, so a sale outside the REIT's repurchase plan depends on finding a buyer. FINRA requires account statements to warn that even if a customer is able to sell, the price received may be less than the estimated value shown on the statement.
Why Are Non-Traded REITs Considered Illiquid Investments?
They have no exchange and no daily market price. The main exit is a repurchase plan that the REIT is not obliged to offer and that its board can limit, amend or suspend. When many investors ask to redeem at once, requests may be filled only in part or deferred to a later window.
How Are Non-Traded REIT Redemptions Limited?
Repurchase plans usually cap redemptions each month, quarter or year, and fill requests pro rata when demand exceeds the cap. Many redeem shares held for less than a year at a discount to the stated value. The board can change or suspend the plan, so the prospectus terms in force at the time of the request apply.
Are Non-Traded REIT Distributions Paid From Income?
Not always. SEC staff have noted that non-traded REITs often pay distributions above their cash flow from operations, especially early on, funding the gap with offering proceeds or debt. Such payments can return part of the investor's own money and dilute the shares. The REIT's SEC reports show the sources each year.
Do State Rules Limit How Much You Can Put in Non-Traded REITs?
They can. Under NASAA guidelines that state regulators apply to REIT registrations, effective January 1, 2026, total holdings in non-traded REITs and similar programs generally may not exceed 10 percent of liquid net worth, unless a state decides otherwise. The limit generally does not apply to accredited investors.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
