Pay Me Now or Pay Me Later
The difference in how sponosrs of Non-Traded Real Estate Investment Trusts (REITs) compensate themselves is interesting and important for investors to understand. Some of the REITs charge fees as a percentage of total assets, some charge fees as a percentage of revenue and some charge fees on both assets and revenue. I determined the Operational Fees for six large REITs, making general assumptions to make the comparison equal - i.e. same amount of leverage and revenue to match the property type held in each REIT. The Operational Fees are shown as a percentage of investor equity. Below are the results along with the corresponding front-end fees:

Front-End Fees			Op Fees
REIT	Load		REIT	Load
Dividend Capital TRT	12.10%		CPA 16	1.78%
Hines REIT	12.20%		CNL Inc Prop	1.78%
Well II	14.00%		Wells II	2.15%
CNL Inc Prop	16.86%		Inland American	2.78%
Inland America	16.93%		Div Cap TRT	3.12%
CPA 16	20.17%		Hines REIT	3.23%

The REITs with the highest Front-End fees have the lowest Operational Fees, and the REITs with the highest Front-End fees have the lowest Operational Fees. It is not suprising that the sponsors of these REITs pay themselves in a way, that in my opinion, obscures how much they are really making, and these fees do not even include any revenue sharing that a sponosr may be paid. An investor hears 1% and thinks its is not that bad. For example, CNL and WP Carey charge a 1% Asset Managment Fee, but this is triple the amount they would earn if they charged a 4% of Revenue Property Management Fee.

Mutiple fees in small amount don't seem bad, until they are added up and compared to what investors are earning. The Hines REIT has three small charges, but added together total more than half of its dividend yield to investors. (Maybe this is one reason Hines REIT has no exit stragegy.) Understand the fees before investing.