In the course of answering the client's questions on valuations, Lucia compares Non-Traded REITs to bonds, which is misleading (and I personally have heard him refer to Non-Traded REITs as "Bonds on Steroids" in his well-scripted seminars). This statement vastly oversimplifies the risks related to Non-Traded REITs, and his full statement to "Susan" implies that if she would only hold her non-traded REITs to maturity, she will eventually recover 100% of principal, regardless of interim fluctuations in value. Try telling that to the hapless investors in Behringer Harvard Opportunity REIT I, who may never recover their principal, no matter how long they hold.
In the below clip from the full conversation -- in response to Susan's question about losses in her Non-Traded REIT portfolio -- Lucia says that the value of the REIT will "absolutely" go back up, "I would expect them to go back up!". Who is this guy, Carnac the Magnificent?? Interestingly, he refers to so-called "respectable" Non-Traded REITs in his answer. Which ones are they, Ray? And while you're at it Ray, which ones are NOT respectable?? More importantly, please tell us all how you are able to discern the difference.
Lucia also tells this obviously not so sophisticated investor that if she is receiving a dividend, it must mean that the REIT is healthy and "making money", because they "by law have to distribute to you 90% of their pre-tax income". Unfortunately, Ray failed to tell her the whole truth, and nothing but the truth, which is that Non-Traded REITs frequently pay dividends regardless of whether the REIT managed to produce any pre-tax income at all. So, it appears that the IRS REIT dividend requirement is being ridden by Ray and the "Brain Trust" like an old rented scooter, and it's all in the name of sales. If that's not the case, then Ray and the "Brain Trust" must not know what they're talking about, and I'm not sure which is worse.
N.B. the full, unedited recording has been downloaded and is safely archived in the REIT Wrecks Truth Vault.