Nontraded real estate investment trusts have left thousands of investors with frozen accounts and diminished principal. As 2026 unfolds, recovery options remain available for those who were sold these illiquid products by brokers chasing high commissions.
What happened
Nontraded REITs were marketed as stable income vehicles with yields between 6 and 8 percent. What many investors did not understand was the lack of liquidity, high fee structures, and conflicts of interest baked into the offering documents. When redemption programs were suspended, investors discovered they could not access their capital.
The damage has been widespread. Silver Star Properties, Industrial Logistics Properties Trust, and other nontraded REITs have experienced significant valuation declines. Some programs have halted distributions entirely, while others have cut payouts by 50 percent or more.
Key facts
| REIT Type | Nontraded / Illiquid |
| Typical Front-End Fees | 10% – 15% |
| Typical Distribution Rate | 6% – 8% |
| Liquidity | Redemptions suspended or limited |
| Broker Commission | Up to 7% of offering proceeds |
Red flags that should have been caught
Brokers who sold nontraded REITs often failed to disclose the risks adequately. Suitability obligations require that investments match a client’s risk tolerance, liquidity needs, and investment objectives. For retirees needing access to principal, an illiquid REIT is rarely suitable.
Common failures include: failure to disclose the lack of a public market, failure to explain fee drag, failure to perform due diligence on the sponsor, and failure to monitor concentration limits. Many portfolios ended up with 30 percent or more allocated to a single nontraded REIT.
What investors lost
Losses vary by program and entry point. Early investors may have recovered some principal through distributions, while late entrants have suffered permanent impairment. The table below illustrates typical outcomes based on a $100,000 initial investment.
| Entry Year | Initial Investment | Estimated Current Value |
| 2019 | $100,000 | $55,000 – $70,000 |
| 2021 | $100,000 | $35,000 – $50,000 |
| 2023 | $100,000 | $25,000 – $40,000 |
What affected investors can do now
Recovery through FINRA arbitration is the most common path for investors who were misled about nontraded REIT risks. The process typically takes 12 to 18 months and can result in awards covering principal losses, attorney fees, and interest.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
Time matters in REIT recovery cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
- Main Phone: 1-888-885-7162
- Visit htattorneys.com for a free consultation
Offices in Florida, New York, Arizona, Texas, and North Carolina. Former Wall Street defense attorneys with 95+ years of combined experience. No recovery, no fee.
