Nontraded REITs Growing By Record Rates - Projected To Raise $45 Billion In 2022

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Ukraine, rising interest rates, plummeting markets and rampant inflation. These are few of the main topics that the mainstream media is always covering. With everything going on in the world, more investors are deciding to invest in alternative investments like nontraded real estate investment trusts (REITs).

Per investment bank Robert A. Stanger & Co., nontraded REITs are projected to raise $45 billion in 2022. This represents a 23% increase from $36.5 billion in 2021. Post pandemic, demand will only increase for this sector, including beaten-down sub niches like office space.

Related: Tired of Wild Market Swings? Discover The Advantages of Non-Traded REITs

Brookfield Real Estate Income Trust

Brookfield Asset Management BAM finalized its nontraded REIT Brookfield Real Estate Income Trust back in November. This new company was formed by transitioning the advisory role of Oaktree Real Estate Income Trust Inc., one of Brookfield’s subsidiaries, over to Brookfield.

Brookfield, the parent company, is a leading global alternative asset manager with approximately $650 billion assets under management (AUM) across industries like real estate, infrastructure, private equity and renewable energy. Its clients include pension plans, endowments, sovereign wealth funds, private wealth investors and insurance companies.

This REIT has exposure to various types of investments like office space, multifamily homes, debt and logistics warehouses worldwide. It also has more alternative holdings, including DreamWorks Animation Studios in Glendale, California.

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The Class S shares of this REIT returned 23.39% in 2021 and 11.09% year-to-date. Class S shares are available to retail investors and have a minimum investment of $2,500.


Blackstone Real Estate Income Trust 

Blackstone BX is a major player in residential and commercial real estate. It’s becoming a household name, since it started acquiring and renting multifamily homes throughout the country.

Kevin Gannon, chairman and CEO of Robert A. Stanger & Co., noted that Blackstone raised 70% of the new capital in the nontraded REIT space back in 2021.

Blackstone’s Class S nontraded REIT shares have returned 12.8% since the beginning of the year. This REIT also invests 80% of its portfolio in two recession-proof and in-demand sub niches: industrial and residential real estate. 

Ares Management

In July 2021, Ares Management ARES bought Black Creek Group’s U.S. real estate investment advisory and distribution business. The acquisition increases Ares’s capital by $5.1 billion.

Black Creek also purchased 48 industrial properties from affiliates of Prologis Inc. PLD for roughly $920 million. These properties are located throughout the U.S. and total $8.3 million square feet of Class A and B space.

One of the main reasons that Black Creek Group acquired these industrial properties is because of the rise of e-commerce. For example, it's projected the U.S. will need to add 1 billion additional square feet of warehouse space by 2025 to keep up with this demand. This growing REIT and rising demand of e-commerce will help it raise more funds from investors.

Final Note

The world is greatly changing, with markets seeing significant losses. So more investors are turning to alternatives to provide diversification from standard stocks, bonds and exchange-traded funds (ETFs). One of the more popular alternatives is nontraded REITs.

Related: 3 Non-Traded REITs To Consider Adding To Your Portfolio

These REITs act as a hedge against inflation and aren’t as susceptible to the financial media and whims of the stock market. Demand will continue to increase as many sectors like e-commerce continue to grow. Many asset management companies that have nontraded REITs, including Brookfield, Blackstone,and Ares are seeing record inflows and growth rates and are making large acquisitions of other real estate companies.

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