Astamar Asset Management LLC
Understanding Private REITs: A Strategic Gateway to Real Estate Investing

Introduction
Real estate is an attractive investment class offering income and long-term capital appreciation. Yet, managing properties can be time-consuming and complex. Real Estate Investment Trusts (REITs) allow investors to benefit from real estate income without hands-on management. While publicly traded REITs are widely known, private REITs are gaining attention among accredited investors seeking higher yields and niche exposure.

What Are Private REITs?
Private Real Estate Investment Trusts are investment vehicles not listed on national stock exchanges and not registered with the U.S. Securities and Exchange Commission (SEC). These REITs raise capital through exemptions like Regulation D or Rule 144A, targeting accredited investors or qualified institutional buyers. They often provide higher dividend yields, lower compliance costs, and access to specialized or underdeveloped real estate markets.

A Brief History of REITs
REITs were established in 1960 under the Eisenhower administration. They evolved through legislation like the Tax Reform Act of 1986. Today, REITs control over $4.5 trillion in commercial real estate, representing nearly 31% of the total U.S. market.

Advantages of Private REITs
1. Higher Dividend Yields: Often yield 7%–8% annually.
2. Reduced Market Volatility: Share prices update quarterly.
3. Lower Compliance Costs: Avoid expensive reporting requirements.
4. Tax Advantages: Allow for depreciation and tax deferral strategies.
5. Access to Niche Opportunities: Flexibility to invest in underrepresented markets.

Risk Considerations & Investment Horizon
Private REITs carry higher risks due to lower oversight and illiquidity. They are best suited for long-term investors prepared to lock up capital for 5–10 years. Due diligence is critical to evaluate the management team, strategy, and potential returns.