Investment Program Association (IPA) Statement in Response to The Wall Street Journal Article on Non-Listed REITs

Ellicott City, Maryland, UNITED STATES

ELLICOTT CITY, Md., Dec. 20, 2013 (GLOBE NEWSWIRE) -- Kevin Hogan, President and CEO of The Investment Program Association (IPA), a trade association for non-listed direct investment vehicles, issued the following statement in response to the article in The Wall Street Journal, ("A Murky Real-Estate Market Comes Into focus," Dec. 18):

For nearly two years, the IPA has worked with FINRA to develop the most practical presentation of information on the initial account statement of a non-listed REIT shareholder (Regulatory Notice 12-14). It is a complex process. The IPA looks forward to continuing our work with FINRA for that practical solution, but the proposed regulation is not yet final, and we cannot make further public comment until it is.

Valuation is a critical element to the discussion of non-listed REITs and two factors must be kept in mind. First, valuations occur at a single point in time. Today's valuation tomorrow. Characterizing an industry's overall prospects by those valuations may distort the industry's picture. The most important valuation non-listed REIT valuation occurs at the exit event in the form of a listing, merger or other disposition. In 2013 alone, more than more than $30 billion has been returned to thousands of non-listed REIT shareholders through successful, full-cycle liquidity events.

Second, during the recent market downturn, almost all real estate valuations were negatively impacted. Broadly speaking, many sectors are now recovering, but at a different rate than equities. That non-correlation is one of the reasons investors choose to invest in real estate.

Last April, the IPA issued a practice guideline developed by sponsors, broker-dealers and other industry participants to improve the standardization, transparency and timeliness of non-listed REIT valuations. Among its many recommendations, the guideline calls for accelerating the first valuation by six months and using an independent third party for a REIT's annual valuation. We expect the positive effect of this guideline to be apparent in the first months of 2014 with the filings of 2013 annual reports.

We look forward to continuing our work with national and state regulators.

About The Investment Program Association

The Investment Program Association (IPA) was formed in 1985 to provide effective national leadership for the direct investment industry. The IPA supports individual investor access to a variety of asset classes not correlated to the traded markets and historically available only to institutional investors. These investments include public non-listed REITs (NLREITs) and Business Development Companies (BDCs), Energy and Equipment Leasing Programs, and private equity offerings. For the last 28 years, the IPA has successfully championed the growth of such products, which have increased in popularity with financial professionals and investors alike. Direct investments are held in the accounts of more than 2 million individual investors. The mission of the IPA is advocating direct investments through education. Access the wealth of IPA educational materials here, or visit the IPA online for more information about becoming a member.

To stay up-to-date with IPA news, follow @IPADirectInvest on Twitter.


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