Cole Real Estate Investments recently announced the launch of its latest investment offering, a non-traded REIT registered with the Securities and Exchange Commission, but nonetheless tied to the fund’s daily net asset value.
The Cole Real Estate Income Strategy (Daily NAV) will be made available through registered investment advisors and broker-dealers that charge their clients a fee for their services. Investors will not pay upfront selling commissions for shares. The REIT will invest in commercial real estate, with a primary focus on retail, office and industrial assets.
“Our thinking was that we could launch a commercial real estate strategy in a different structure that would look and feel a lot like a mutual fund (however, it’s not a mutual fund) with NAV pricing and the ability to buy and sell daily,” says Jeff Holland, EVP and head of capital markets at Cole.
The fee structure of the product is specifically geared to financial advisors, which Holland says will “up the distribution environment,” and make it easier for individuals who have not traditionally considered non-traded REITs as a portion of their portfolio to now do so.
“It will allow financial advisors to do what financial advisors do,” Cole says. “The fact that this vehicle has liquidity and a daily valuation means that the advisor can make adjustments to bring the portfolio in line with the customer’s goals. If they need $100 more a month in income they can add a little bit to the product.”
Cole adds that this product is the first of its kind, noting that Fidelity was one of the first firms to explore the concept and “almost got to the finish line," but decided to pull the product in the face of the real estate downturn in 2008.
“Some of the other long tenured non-traded REIT sponsors have thought about portions of this structure, but they didn’t think about the pricing and liquidity part.”