Your Nontraded REIT Pays You Regularly, but Is Your Money Trapped?

The nontraded REIT industry has nearly quadrupled since 2020, but investors looking to jump in need to know about some important trade-offs.

With nontraded REITs, investors put money into a professionally managed real estate portfolio, receive regular distributions, and generally have opportunities to redeem shares at net asset value. For many investors, that can feel like owning an income-producing fund.

But there’s a catch: Receiving a distribution and being able to cash out your investment are two very different things.

Nontraded REITs own assets such as apartment buildings, warehouses, data centers, and other properties that cannot be sold instantly. To bridge that mismatch, most modern vehicles offer periodic share-repurchase programs. Those programs can provide liquidity during normal markets, but they typically limit how much investors can withdraw and can be reduced or suspended when redemption demand is too high.

That trade-off is one of the main findings from our 2026 US Nontraded REIT Landscape. The industry has grown to roughly $115 billion in net assets, and investor flows have recently shown signs of stabilizing. But the experience of the past several years demonstrates why investors need to look beyond headline distribution rates and smooth-looking returns before buying.

Here are four things investors and financial advisors should know.

1) You May Be Able to Get Your Money Out, but There Are Limits

Unlike shares of a publicly traded REIT, nontraded REIT shares cannot be sold on an exchange.

Instead, investors submit a repurchase request to the REIT itself through a repurchase program, typically during a monthly or quarterly window. Many of the largest vehicles cap total repurchases at roughly 2% of NAV per month and 5% per quarter, though the board of directors may reduce or suspend repurchases under certain circumstances.

When requests remain below those limits, the system can work as expected: submit a request and receive cash based on NAV.

The complications start when too many investors want out at once. Once demand exceeds the available capacity, a REIT may prorate requests, meaning investors receive only a portion of what they asked for. Any remaining amount may have to be resubmitted in a later period. The REIT’s board also retains discretion to modify or suspend the program altogether.

That is why a repurchase program should be viewed as potential liquidity, not guaranteed liquidity.

The 2022-23 real estate downturn offered a real-world test. Redemption requests exceeded limits at several major nontraded REITs. Blackstone Real Estate Income Trust, or BREIT, and Starwood Real Estate Income Trust, or SREIT, both prorated investor requests for extended periods, while some other vehicles experienced much less redemption pressure and continued satisfying requests.

Starwood eventually went further. After years of elevated redemption demand, it reduced its repurchase limits and ultimately suspended most ordinary redemptions in April 2026.

The underlying rationale for these limits is reasonable: Real estate cannot be liquidated overnight without potentially accepting poor prices. Restricting withdrawals can protect remaining shareholders from forced property sales. Investors need to plan as if that protection comes at the expense of near-term access to their cash.

2) Smooth Returns Can Hide How Much the Underlying Real Estate Is Moving

Another appealing characteristic of nontraded REITs is their relatively smooth performance, but some of that stability comes from how the assets are valued.

Publicly traded REITs are repriced continuously as buyers and sellers transact. Nontraded REITs instead derive their NAVs through appraisal-based valuation processes. They periodically reassess property values, then incorporate them into their NAVs. That process naturally smooths reported returns.

Appraisals don’t move as abruptly as exchange prices, so nontraded REITs can appear to have much lower volatility and lower correlation with stocks than public market real estate. That doesn’t mean the buildings themselves are safer. Part of the difference is simply a measurement effect.

The distinction becomes clearest when markets change rapidly. When interest rates jumped in 2022 and 2023, listed REIT prices reacted quickly. Private property values adjusted more gradually as higher financing costs, cap rates, and discount rates worked their way through appraisals.

SREIT and Nuveen Global Cities REIT were among the vehicles that reported declining NAVs as valuations caught up with changed market conditions.

Investors shouldn’t mistake a smooth-looking statement for an absence of economic risk.

3) The Industry Is Recovering, but Investor Demand Is Highly Selective

Despite the stresses of recent years, nontraded REITs remain a sizable and growing corner of the private market universe.

Industry net assets reached approximately $115 billion as of June 30, 2026, up from about $34 billion at the end of 2020. BREIT alone accounted for $56.6 billion, nearly half the market, while the 10 largest vehicles represented more than 80% of industry assets.

Aggregate flows among the largest vehicles moved back into positive territory in late 2025, while median nontraded REIT returns have recently been positive. That’s a reversal from 2022–24, when sharply higher interest rates, falling commercial real estate values, and uncertainty about private market valuations drove up redemption requests as new fundraising slowed.

The fundraising recovery has not been evenly distributed, however. Blue Owl Real Estate Net Lease has been the clearest winner, gathering approximately $6.1 billion since 2024’s start. Fortress Net Lease has also attracted significant capital relative to its size. Many established vehicles, however, have experienced much weaker organic asset growth.

That suggests investors are not simply “returning to nontraded REITs.” They appear to be discriminating among managers, strategies, and property exposures.

4) Before Buying, Ask How Much of Your Portfolio You Can Afford Not to Touch

Nontraded REITs are best viewed as long-term private real estate allocations, not as higher-yielding bond substitutes or less-volatile versions of publicly traded REITs.

Different vehicles can also look remarkably different underneath the wrapper. One might emphasize rental housing, another industrial real estate, another long-term net leases, and another a combination of property ownership and real estate credit. Leverage, financing structures, valuation practices, distribution coverage, and fees can vary substantially from one manager to another.

Costs deserve particular attention. The advertised management fee is only one part of the equation. Investors may also bear distribution or servicing fees, performance participation, vehicle operating expenses, property-level expenses, and financing costs.

That means due diligence should happen at three levels:

• Do I want private real estate?
• Is a nontraded REIT the right structure for accessing it?
• Do I want to own this particular manager or portfolio?

For investors who need daily liquidity, observable market prices, or frequent portfolio rebalancing, listed REITs may be a better fit. Investors who use nontraded REITs should instead think of them as strategic, multiyear allocations and maintain sufficient liquid assets elsewhere in the portfolio.

A nontraded REIT may continue sending investors a distribution every month even while it restricts access to invested capital.

So, before focusing on the payout, investors should ask a more fundamental question: If I needed this money during the next real estate downturn, how confident am I that I could wait? For nontraded REIT investors, the answer may matter more than the headline yield.