Three Ares and Invesco nontraded REITs raised nearly six times as much capital as shareholders asked to withdraw during the third quarter, with Delaware statutory trust sales contributing to the proceeds.
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Ares Industrial Real Estate Income Trust, Ares Real Estate Income Trust and Invesco Real Estate Income Trust together paid $117M in redemption requests, fulfilling them all, and raised $692M in gross proceeds during the quarter, AltsWire reported.
This comes as redemptions have become a concern for nontraded REITs in recent years, leading to caps limiting the allowed number of requests and unfulfilled backlogs, which are now largely erased.
Starwood Capital Group froze redemptions for its nontraded REIT in April, saying it would focus on shoring up liquidity and avoid selling top-tier assets in a non-ideal market.
DWS Group said last month that it would liquidate one of its nontraded REITs after failing to meet investor redemption requests on and off for years.
Real estate fundraising amounts and targets have also been shrinking as investor appetite for property has been muted this year.
Gross proceeds figures for AIRET, AREIT and INREIT have benefited from distribution reinvestment plan proceeds and sales from each sponsor’s Delaware statutory trust program.
AIREIT nearly tripled its quarterly raise, bringing in $408M during Q3 compared to $146M in Q2, the company disclosed. Redemption requests also decreased from $105M in Q2 to $76M in Q3.
The industrial REIT owns 270 buildings totaling 54M SF in 31 U.S. markets, eight of which were acquired during Q3. The portfolio is 90% occupied, up from 88% occupied during Q2.
AIREIT’s quarterly raise includes $64M of DST interests financed by DST program loans, up from $6M in the second quarter, AltsWire reported.
DSTs, which allow individuals to pool funds into commercial real estate assets and own fractional interests while fund managers take care of the rest, have become increasingly popular as aging baby boomers move away from active property investment. Equity raised for DSTs totaled $7.5B as of the end of September, up 27% from the $5.9B raised in the same period last year.
AREIT owns 170 industrial, multifamily, retail and other properties totaling 36M SF. The company stated that it acquired nine retail properties, four industrial properties, four residential properties and a self-storage property for $1.1B during Q3.
The REIT raised $183M in Q3, down from $646M in Q2. The following quarter’s raise includes $13M of DST interests. Redemption requests also fell from $43M to $27M quarter-to-quarter.
INREIT raised $101.1M in gross proceeds during the third quarter, up from $33.3M in the second quarter. The proceeds include sales through its DST program, but INREIT did not disclose a specific dollar amount.
It saw a moderate bump in redemption requests, from $11.6M in Q2 to $13.8M in Q3 but still fulfilled them all.
The Invesco REIT began offering new investors bonus shares worth up to 5% of their subscription amount on Oct. 1. Invesco’s adviser will fund the bonus shares.
INREIT’s portfolio includes 73 properties totaling 11.6M SF in 32 markets. It bought a 323K SF shopping center in Raleigh, North Carolina, for $87.2M in September.
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