tag:blogger.com,1999:blog-21846828.post8572661530686520162..comments2024-01-14T16:01:08.962-08:00Comments on The Rational Realist: Rational Realisthttp://www.blogger.com/profile/08886526093283532105noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-21846828.post-32238580809177877652010-06-23T14:32:59.168-07:002010-06-23T14:32:59.168-07:00You're right, until the front-end fees are red...You're right, until the front-end fees are reduced, elimination of an unknown future fee is not that important. Brokers can't complain about high fees until they cut their compensation. Most of these REITs have five year liquidation windows, so I think the broker commission should be closer to 3% to 4% at max given this short time horizon, about half the current rate. The paradox is that a REIT with low fees should be, over time, able to raise more money because its performance would improve with reduced fees, allowing it and future deals to attract more assets. Unfortunately, no sponsor will willing to make this decision.Rational Realisthttps://www.blogger.com/profile/08886526093283532105noreply@blogger.comtag:blogger.com,1999:blog-21846828.post-72857424573285488032010-06-23T14:01:54.216-07:002010-06-23T14:01:54.216-07:00To think that a massive move towards fee reduction...To think that a massive move towards fee reductions is underway is naive. The internalization fee is being dealt with because the sponsors know that this is the one fee they can restructure and it does not impact things in the near term. The sponsors are doing this because they know the winds of change are coming to this industry in terms of regulatory scrutiny and some of them are trying to get out in front of this. The other fees are vital to the sponsors' survival and those will not be touched. If the fee to the financial advisors is cut then the advisors won't sell this crummy product to their clients and the whole industry shrinks, or better yet, goes away alltogether. The ONLY reason these firms are able to raise money is because of the legal kickback to the advisor...it is a huge amount of money and it is a temptation that these advisors cannot resist. Cutting back or cutting out this bribe would bring about the demise of the non-traded REIT industry.Anonymousnoreply@blogger.com