Most open non-listed REITs have reported updated NAVs as of 12/31/16 with NAV changes ranging from 0.0% to 6.9%. Softening commercial real estate transaction prices should result in lower NAV gains or even losses with subsequent updates in 2017.
The average Total Fee Burden for non-listed REITs has declined by 50 basis points from August 2016 to June 2017. Two key trends are sponsor funding of sales fees (such as Hines Global II) and the elimination of real estate transaction fees (such as Inland Residential Properties).
ARC New York City REIT has a current estimated net asset value, unanimously approved by its board, of $21.25 per share. Based on Summit's 3/31/17 market value estimate, ARC New York City REIT investors should brace for a 50%-70% valuation decline.
Hospitality Investors Trust reported a 39% decline in its reported NAV from $21.48 to $13.20 as of 3/31/17, despite improving operations and higher market prices. This steep decline highlights issues with non-listed REIT valuations.