In an investment world awash with plain-vanilla offerings and obscure flavors, unlisted REITs are among the most exotic choices. There are vocal camps for and against — those in favor point out that, for clients hungry for yield, private REITs can offer steady income and low volatility. Diversification through ownership in commercial and multifamily residential real estate is also often cited as a plus.

Over the last year, though, these vehicles have come under extra scrutiny from regulators and worried planners. They are highly illiquid, charge high fees and can be difficult to analyze. Yet some planners still choose them for clients.

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