What You Need to Know
- Comments are due by Aug. 11.
The North American Securities Administrators Association is seeking public comment until Aug. 11 on a plan to revise its policy regarding real estate investment trusts by bringing it more into line with the Securities and Exchange Commission’s Regulation Best Interest.
Melanie Senter Lubin, NASAA president and Maryland Securities Commissioner, said in a statement announcing the plan that the proposed revisions “are aimed at updating and enhancing” NASAA’s REIT policy with “key investor protection provisions.”
The group said the statement of policy, last revised in 2007, applies to the qualifications and registrations of REITs.
The proposed revisions “would update the conduct standards for brokers selling non-traded REITs by supplementing the suitability section with references to the SEC’s best interest conduct standard,” NASAA said, and also includes an update to the net income and net worth requirements “through adjusting upward to account for inflation occurring since the last adjustment.”
Anya Coverman, SVP of Government Affairs and general counsel at the Institute for Portfolio Alternatives, told ThinkAdvisor Monday in an email message that beyond the short 30-day comment period, “NASAA’s claims are unsupported as they provided little data and no economic analysis to support any part of this proposal. Beyond this, the proposal fails to address the state of today’s marketplace as they do not distinguish between lifecycle REITs from NAV REITs, the latter of which are almost exclusively sold today.”
Non-traded REITs, Coverman explained, are publicly offered REITs that are not listed on any exchange.
“They must register their securities with the SEC, and the SEC and FINRA regulate the sale of their shares to retail investors,” Coverman continued. “‘Net asset value’ REITs are the only ones sold today. They are continuously offered, and they offer and redeem their shares at the net asset value of the underlying real estate portfolio. Former ‘lifecycle’ REITs had a defined life cycle rather than an objective of being offered continuously.”