If Marc Nemer has his way, 2011 will be the year the non-traded real estate investment trust (REIT) industry is changed forever.
As the president of Phoenix-based Cole Real Estate Investments, one of the largest sponsors of non-traded REITs, Nemer has filed two new product offerings with the Securities and Exchange Commission that many industry pundits describe as potential game changers.
In 2010, Cole made its own impression on the commercial real estate scene, purchasing some $2.5 billion worth of properties across the U.S.
Nemer's new concept is simple: create investment products that more closely mirror mutual funds than the traditional non-traded REIT offering, and at the same time broaden the base of financial advisers who can sell them. The two new products, which are expected to formally launch in 2011, eliminate the highly criticized practice of charging high front-end fees and fees for acquiring and selling off properties.
It's a bold yet calculated move for the Harvard Law School graduate. Prior to joining Cole in 2006, Nemer worked at two of the country's largest law firms, Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom and honed his skills in securities offerings, mergers and acquisitions, and corporate governance.
Law provided a good background for leadership and critical thinking. “It's called ‘issue spotting’ but it's really anticipating issues, seeing things holistically, the big picture and then being proactive about finding solutions.”
Most M&A deals have a real estate component, says Nemer. “You're not only acquiring the company, but you're acquiring all of their real estate assets.” Educating financial advisers about nontraditional products and the real estate business is an ongoing challenge. Cole recently held a conference in Phoenix where 800 top financial advisers gained insights into real estate investments that are not directly tied to the stock market.
“Non-traded REITs are at a significant inflection point, almost where the mutual fund industry was at the end of the late '70s and early '80s,” says Nemer.
“Advisers who were on the front end of that wave were better at making solutions available to their clients, and they were able to grow their businesses in a more meaningful way.”