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Investors are pouring cash into non-listed REITs, which continue to aggressively stockpile assets as they build portfolios.

“There were more private REIT deals last year than in 2007,” says Dan Fasulo, managing director for Real Capital Analytics (RCA), based in New York City.

Non-listed REITs accounted for $21 billion in property sales in 2013—that’s an 85 percent increase in volume from 2012, making them one of the fastest growing segments of the market, according to data from RCA.

Non-listed REITs raised about $20 billion in 2013, according to the Investment Program Association (IPA), a trade group that follows non-listed REITs. A significant amount of that investment money probably came individuals who re-invested proceeds returned to them. Seven non-listed REITs returned a total of $16 billion to investors in 2013 in “liquidity events”—either the sale of their portfolios of properties or initial public offerings. A lot of this money went back into non-listed REIT investments. “Seventy percent or more of investors put their money right back in,” says Kevin Hogan, president and CEO for IPA.

So far, non-listed REITs are raising money from investors even more quickly in 2014. “Everything I’ve heard shows continued strong results,” says Hogan. Once again, a large amount of money is expected to come from existing investors. In the first quarter alone, non-listed REITs were expected to return about $6.5 billion to investors in liquidity events, according to Robert A. Stanger & Co.

A typical non-exchange-traded REIT raises $1 billion or more to invest in the property types outlined in its prospectus. Historically, non-listed REITs used to hold onto their investor capital for seven or more years, earning regular dividends for the investors. “Recently the number of years is shrinking down to around three or four years of hold,” says IPA’s Hogan. Rising property values may be helping to shorten these hold periods, as non-listed REITs take profits.

The properties bought by non-listed REITs include all major property types and some minor. “You could find a REIT that is just invested in golf courses,” says Hogan. Most focus on properties like office or retail spaces that need less intensive management. Apartments, which require more careful management, only made up $3.2 billion of the $21 billion in total property purchased by non-listed REITs in 2013.

Most of the properties bought by non-listed REITs tend to be smaller deals, well under $100 million. “They tend to go for bite-sized properties,” says RCA’s Fasulo. The purchase last year of a 48.9 percent interest in One Worldwide Plaza, a Class-A office tower in New York City, by American Realty Capital New York Recovery REIT, Inc., is the exception that proves the rule.

Non-listed REITs sell themselves to their investors as a hedge against inflation that is not subject to the volatility of the stock market. Non-listed REITs are relatively illiquid. Investors certainly can’t trade in and out of these REITs like a publicly-traded stock.

The average investment in non-listed REITs is about $30,000. In the past, these investors might have bought shares in the ownership of individual commercial or multifamily properties through a tenant in-common (TICs) ownership structures. Falling property prices and heavy burdens of debt drove many TICs into foreclosure in the financial crash. Investors in non-listed REITs may benefit from putting their money into a portfolio of properties owned by the REIT rather than a single-asset TIC.

This article was republished with permission from National Real Estate Investor.