I just read Wells REIT II's 8-K and supplement to its prospectus. The REIT is suspending its Ordinary Redemption program, as of the end of February, until at least the fourth quarter of 2009. The supplement and 8-K leave the door open for an extended suspension. When I was reading the third quarter 2008 10-Qs from Wells and other public, non-traded REITs, I noticed the jump in redemptions over the nine-month period ending September 2008 compared to the same period in 2007. I am guessing as the financial crisis worsened in late 2008 and into 2009, the redemption amount has increased from a high level to an untenable level.
Hines REIT has limited its redemptions to 1/12 of 10% per year, which is not a redemption reduction, but a method to control the redemption rate. This tells me that its redemption requests are running at a high level.
Other non-traded REITs will halt or restrict their share redemption programs in the coming weeks and months. These programs are not designed to handle large scale redemptions, and in the current real estate environment cash is paramount. Temporary redemption suspensions may not be the best marketing move, but they should be a good business move in the long run