Non-traditional Commercial Real Estate

Traditionally, owners of commercial properties, such as retail, office, industrial, multifamily, hotels and healthcare, have adopted a real estate investment trust (REIT) structure due to its inherent benefits. Over the past few years, an alternate REIT segment has emerged, comprised of owners of income-producing real estate such as timber, data centers, document storage facilities, cell towers, prisons, and billboards. These companies have opted to convert to a REIT to capitalize on the benefits of the structure, and are classified as “non-traditional” as the underlying assets have different and unique characteristics compared to the owners of traditional properties.

Non-traditional REITs have performed better financially relative to the traditional ones during the past five-year (2007-2011), 10-year (2002-2011) and 20-year period (1992-2011), likely due to the distinctive features of the varied non-traditional REIT subsectors.

That said, a REIT conversion is a complex process and requires strategic, financial, and operational restructuring to comply with regulations.

Read this paper to learn about this new segment leveraging the REIT structure and the key strategic and tactical conversion priorities for an REIT conversion.