Top broker-dealers, including the likes of LPL Financial and Advisor Group, have been extremely cautious about selling real estate investment trusts and Interval funds during COVID-19; the market for commercial real estate is absorbing the shock of the pandemic, and some broker-dealers have recently put at least a short-term halt on the sales of the products to see where real estate valuations settle in the coming months.
That has cut the legs out from under the sales of such products. According to Robert A. Stanger & Co. Inc., broker-dealer sales of nontraded REITs crashed in April, falling to $310 million from $780 million in March. And REIT sales had hit a combined $2.5 billion in February and January.
The sales figures reflect a major pullback of capital placement into alternative investment real estate, according to Stanger.
“While we consider this curtailment in capital formation an intelligent reaction to the healthcare crisis, we expect it to subside with a recommencement of real estate capital formation in coming months as the impact of the pandemic subsides and state economies reopen,” noted Stager’s CEO, Kevin Gannon, in a statement Wednesday morning.
While some broker-dealers have disallowed the sale of such products, at least for the short term, one firm, Cambridge Investment Research Inc., is allowing its reps and advisers to continue selling the products, although with an abundance of caution, according to Amy Webber, Cambridge’s president and CEO.
Sales of such products are “definitely a concern,” Webber said in a recent interview. “Because of the delays of valuation, clients could be buying something that’s not worth tomorrow at what it’s valued at today. There is a lot of caution.”
The volumes of sales for such products have decreased at the firm but there is no ban on selling REITs or other such real estate products at Cambridge. However, the firm is carefully examining each sale on a case-by-case basis, Webber said.
“We are looking at each [real estate] program individually and spending time with advisers and asking why would anyone sell one of these right now, anyway,” she added.
Integrated Partners is adding a mother-son tandem to its network in Missouri as Kestra onboards a father-son advisor duo from UBS.
Futures indicate stocks will build on Tuesday's rally.
Cost of living still tops concerns about negative impacts on personal finances
Financial advisors remain vital allies even as DIY investing grows
A trade deal would mean significant cut in tariffs but 'it wont be zero'.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
