With Blackstone raising $250 million a month in its recently created NAV REIT, Nuveen, Starwood Capital, Griffin Capital and Oaktree are poised to follow the nation’s largest alternative investment manager with similar vehicles of their own.

It’s not yet clear whether NAV REITs, technically described as non-exchange-traded, perpetual-life REITS that price their net asset value daily and offer monthly redemptions, will replace non-traded REITs as a leading private investment structure for retail investors, but the market is rapidly expanding.

Since Blackstone launched Blackstone Real Estate Income Trust (BREIT) in 2017, the market has grown to more than $2 billion. Blackstone has captured about 67 percent of all assets, according to Kevin Gannon, president of Robert A. Stanger & Co.

Unlike previous incarnations of private REITs (sometimes called lifecycle REITs), NAV REITs don’t liquidate. That leaves the decision of when to sell the investment up to the broker or advisor and their client, not the product sponsor.

Whereas the old lifecycle REITS were designed to have five-year to 10-year lifespans, NAV REITs are intended to be the perpetual-life vehicles. Most also have language in the prospectus that gives them the option to convert to a publicly traded REIT.

So far, the various NAV REITs that have been introduced have much lower fees than the old generation of non-traded REITs, which were frequently criticized for hefty expenses and commissions. While this structure is more investor-friendly, it requires individual REIT sponsors to achieve greater economies of scale to be sustainable.

Gannon said the value proposition is that NAV REITs aren’t subject to equity market volatility and yet offer far more liquidity than the old generation of private REITs. While there were secondary markets to trade the former vehicles, liquidity was thin and bid-ask spreads were wide.

In a world starved for income, some believe that prices of publicly traded REITs have reached rich valuations, like consumer staple and utility stocks. Some investors view all three groups as proxies for bonds. As the Fed has raised interest rates over the last year, many of these securities have suffered.

With $434 billion in alternative assets under management, Blackstone doesn’t have any profitability questions. New entrants to the market like Starwood, Nuveen, Griffin and Oaktree are also highly profitable businesses, though the jury is still out on how they will fare in the newfangled market.

Most of the new players are modeling their investment structures along the same lines as Blackstone to make it easier for research and due diligence experts at brokerages and RIAs to examine the products. For its part, Blackstone probably wants other real estate operators to enter the space because it provides them “some cover” and validates the investment vehicle, Gannon said.

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