I listed a comparison of non-traded Real Estate Investment Trust fees last month. Here is another view of the operating fees. The table below shows the operating fees as a percentage of the distributions:
|CNL Inc Prop||32.01%|
|Div Cap TRT||56.73%|
The operating fees are the expected fees - assuming the anticipated leverage based on the prospectus and operating revenue based on property type, and the distribution is the current distribution. The calculation reflects the expense to distribution ratio when the programs are fully operational. An increase in distribution will lower the ratio. On a positive note, it is good that the two net lease programs have the lowest ratio. Hines' high ratio may be why it has no stated exit strategy.
I don't suspect that the sponsors of these REITs tell investors that their annual fees will be one-third to more than half of what is paid out in distributions. And the above fees do not reflect any incentive fees (except Inland, which has too low a hurdle not to include), which would make the ratio jump. The REITs are all advised by affiliates (the outside advisors), and most of the fees paid to the outside advisors go away if a REIT is listed on an exchange. The public market does not put up with this self-dealing and neither should broker/dealers.