Leo Wells, the biggest player in the nontraded REIT industry, has decided that Wells Real Estate Funds will not sell any new nontraded REIT products for the immediate future.
Wells media spokesperson Margot Olcay confirmed that Wells has decided to halt new REIT sales, citing a “lack of clarity” by the Financial Industry Regulatory Authority on REIT regulation. Nontraded REITs are publicly registered, but traded privately.
“We have decided to postpone new product registration pending greater regulatory clarity; however we remain committed to our investors and will continue to provide the same high level of service they have come to expect from Wells,” according to the firm’s statement.
A recently published report said Wells sent a letter to broker-dealers on Jan. 11 outlining his decision.
Wells Real Estate Funds declined to provide a copy of the letter, saying it was “intended for broker-dealers only.”
Finra’s regulatory notice 09-09, referred to in Wells Real Estate Funds statement, applies to the per-share customer account statement values and due diligence requirements for unlisted REITs and direct participation programs (DPP) that are sold through broker-dealers, invested in real estate and do not trade on a national securities exchange.