NASAA Proposes Amendments to the Statement of Policy Regarding Real Estate Investment Trusts

On March 25, 2025, the North American Securities Administrators Association, Inc. ("NASAA") published proposed revisions to their Statement of Policy Regarding Real Estate Investment Trusts. The proposed revisions to the "REIT Guidelines" would update the conduct standards for brokers that sell non-traded REITs to incorporate the Securities and Exchange Commission's Regulation Best Interest ("Reg. BI"); update the net income and net worth thresholds in the suitability section to account for inflation since they were last updated in 2007; and establish a uniform concentration limit in the suitability section.

All prospectuses of registered direct participation programs, including those for non-traded REITs, contain a "suitability" section that sets forth the standard of conduct applicable to persons selling or recommending the program's shares. Reg. BI enhances the standard of conduct applicable to broker-dealers and associated persons beyond the "suitability" obligations reflected in the REIT Guidelines. The proposed amendments would formally incorporate this new conduct standard as well as any other updated conduct standards that are adopted by the NASAA jurisdictions as applied to brokers recommending these securities.

The proposed amendments would formally incorporate this new conduct standard as well as any other updated conduct standards

The proposal is HERE. The comment deadline was May 28, 2025.