A study of 500 mass affluent investors found that 83% believe commercial real estate is poised to outperform or equal the equity market’s returns.

Commercial real estate makes sense to this class of investors, says Kevin Hogan, CEO of the Investment Program Association -- the association of REIT and other similar product sponsors that commissioned the study. “It resonates with this investment group,” he says. “You realize the strength of the U.S. economy is predicated on commercial real estate."

That sounds like good news for Hogan's member companies. "I certainly can’t go out and buy an office,” he says.

Hogan's group is a trade association for non-listed direct investment vehicles, including REITs; its members include RCS Capital, the country's largest sponsor of nontraded REITs.

The association retained Emeryville, Calif.-based Echo Research to poll investors with annual household incomes of at least $150,000 and net investable assets of $250,000. Echo describes itself as “committed to the marketing, branding and positioning success of our clients.”


Compared with a similar survey conducted by the association last year, respondents’ familiarity with non-listed REITs grew to 35% of respondents in the December poll from 29% in March 2013, according to a statement by the association. More than 80% of those surveyed rated the vehicle as positive or neutral; the survey also found that investors surveyed claimed greater familiarity with non-listed REITs than variable annuities.

About one-third, or 32%, of investors surveyed said they are invested in non-listed REITs. Another 45% of respondents who are familiar with non-listed REITs said they plan to include them in their future portfolio.

“In this low-income environment, investors are looking for income-generating products and non-correlated diversification,” Hogan says in the statement announcing the results.

Nontraded REITs are designed to be held for five to seven years from inception to exit strategy via liquidation, a merger or a listing, according to the release. FINRA has issued an investor alert warning of the complexities and fees associated with nontraded REITs.

In 2013, total sales of non-listed REITs were estimated to be $19.6 billion, according to the association.

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