On September 7, 2025, the North American Securities Administrators Association (NASAA), an organization through which state and provincial securities regulators in the United States, Canada and Mexico coordinate securities registration policies and standards, approved amendments to its Statement of Policy Regarding Real Estate Investment Trusts (REIT Guidelines). The REIT Guidelines, last amended in May 2007, apply to public offerings by real estate investment trusts (REITs) that do not list their securities on a stock exchange and are subject to both federal and state securities law registration requirements. The amended REIT Guidelines take effect on January 1, 2026 and include the following substantial revisions to the prior REIT Guidelines:
- Concentration Limit: The amended REIT Guidelines include a limitation that an investor’s aggregate investment in a REIT and other non-traded direct participation programs[1] may not exceed 10% of such investor’s liquid net worth[2] at the time of investment in the REIT; provided, however, that the limitation is generally not applicable to any investor that qualifies as an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended.
- Income and Net Worth Standards: The amended REIT Guidelines include an adjustment to the income and net worth standards required of REIT investors. Investors now must have (i) a minimum annual gross income of $100,000 and a minimum net worth of $100,000 (each up from $70,000 in the prior REIT Guidelines); or (ii) a minimum net worth of $350,000 (up from $250,000 in the prior REIT Guidelines). These standards will be updated every five years to adjust for the effects of inflation.
The impact of the amended REIT Guidelines remains to be seen; however, the introduction of the concentration limit in particular may result in a further push toward private REIT securities offerings, which are exempt from state securities registration requirements.
[1] The REIT Guidelines define “direct participation programs” as REITs, business development companies, oil and gas programs, equipment leasing programs, and commodity pools, but exclude federal and state exempt private offerings and any investment company registered pursuant to the Investment Company Act of 1940.
[2] The REIT Guidelines define “liquid net worth” as that portion of net worth consisting of cash, cash equivalents, and readily marketable securities.
