Ashford Securities Is Closing As Nontraded REIT Pressure Builds

Wealth Management

Jun 24

Ashford Securities, a Dallas-based broker-dealer that distributed nontraded real estate investment products, is shutting down after roughly six years in operation.

At first, that may look like a small-firm closure. But the story is larger than one broker-dealer filing a termination notice with FINRA. Ashford Securities operated in one of the most difficult corners of wealth management: the sale and distribution of nontraded real estate products through financial advisors.

That market has become harder. Higher interest rates gave investors simpler income alternatives. Publicly traded REITs became easier to compare. Large alternative asset managers gained more power with advisor platforms. Clients became more cautious about liquidity. Advisors had to answer tougher questions about fees, dividends, valuations and product structure.

Ashford Securities’ shutdown sits at the center of those pressures. The firm was tied to nontraded preferred-share programs connected to Ashford Hospitality Trust and Braemar Hotels & Resorts, two hotel-focused listed REITs in the Ashford ecosystem. When a distributor is closely tied to a narrow product shelf, a difficult market can turn into a business-model problem quickly.

TL;DR

Ashford Securities is shutting down: The Dallas-based broker-dealer filed a termination notice with FINRA after roughly six years in operation.
The firm sold nontraded real estate products: InvestmentNews reported that Ashford Securities distributed nontraded REIT-related products and ran nontraded preferred-share programs.
The product ecosystem was narrow: The programs were tied to Ashford Hospitality Trust and Braemar Hotels & Resorts.
Ashford Hospitality Trust closed a key offering: The company announced that its Series J and Series K nontraded preferred stock offering would close on March 31, 2025.
The broader market was difficult: Public nontraded REIT fundraising remained relatively flat in 2025 compared with 2024.
Higher rates changed investor behavior: Cash, Treasuries and money market funds gave clients simpler yield alternatives.
Advisor scrutiny increased: Advisors now need stronger explanations around liquidity, fees, valuation, dividend reliability and conflicts.
Main takeaway: Ashford Securities’ closure is a warning about narrow alternative-product distribution, not just a one-firm shutdown.

The Shutdown Is Small, But The Signal Is Not

Ashford Securities is shutting down, according to InvestmentNews.

The firm was based in Dallas and had been open for about six years. InvestmentNews reported that Carl Steigerwald, an industry veteran who previously worked at Carey Financial, served as the firm’s CEO.

The important detail is what Ashford Securities did. It was not a broad retail brokerage with a diversified advisor force and several business lines. It was a small marketing and distribution broker-dealer tied to alternative real estate products.

That makes the shutdown more specific. It points to stress in a certain kind of distribution model: small broker-dealers built around selling niche alternative investments through other broker-dealers and financial advisors.

Why Small Distribution Broker-Dealers Are More Exposed

A broad wealth platform can rely on advisory fees, brokerage accounts, planning revenue, product revenue, cash management and other business lines. A small alternative-product distributor often has a narrower path.

That path depends on several things working at once:

The product sponsor must keep creating marketable offerings.
Broker-dealer platforms must approve or accept the product.
Advisors must believe the product is worth explaining to clients.
Clients must be comfortable with the trade-offs.
Market conditions must support the product’s income, liquidity and valuation story.

When one piece weakens, the distributor feels pressure. When several weaken together, the business can become difficult to sustain.

Ashford Securities Was Tied To A Specific REIT Ecosystem

Ashford Securities’ business was connected to the Ashford hospitality and real estate network.

Ashford Inc. describes itself as an alternative asset management company serving the real estate and hospitality sectors. It says it advises Ashford Hospitality Trust and Braemar Hotels & Resorts, two NYSE-listed REITs. Ashford Hospitality Trust focuses mainly on upper upscale, full-service hotels, while Braemar focuses on luxury hotels and resorts.

That hotel focus matters because the underlying real estate exposure is not generic. Hotels can be attractive when travel demand is strong, but they can also be sensitive to debt markets, refinancing, occupancy, operating costs, consumer demand and business travel trends.

The Product Connection

InvestmentNews reported that Ashford Securities ran nontraded preferred-share programs for Ashford Hospitality Trust and Braemar Hotels & Resorts.

That means investors were not simply buying ordinary publicly traded common shares of those listed REITs. They were looking at nontraded preferred securities tied to companies in the hotel REIT space.

That distinction matters.

A listed REIT gives investors public market pricing and exchange liquidity for the listed shares. A nontraded preferred offering can carry a different investor experience, including limited liquidity, different valuation issues and a more complex explanation around income and exit options.

The Product Shelf Had Already Narrowed

Ashford Hospitality Trust announced plans to close its Series J and Series K nontraded preferred stock offering on March 31, 2025.

The company said the offering had raised about $180 million in gross proceeds since launching in 2022.

For a product issuer, that may mark the end of one capital-raising chapter. For a distributor tied to the offering, it can create a sharper problem. A broker-dealer built around distributing a specific product needs an active product to distribute.

Why A Closed Offering Changes The Business Story

When an offering closes to new investors, the distributor may still have work to do. It may support existing advisor relationships, answer questions and coordinate communication. But the new-sales engine becomes less clear.

That creates several pressures:

New revenue opportunities shrink.
Advisor education becomes less sales-driven and more support-driven.
The firm may need other offerings to stay relevant.
Platform partners may move attention elsewhere.
Advisors may stop discussing the product with new clients.

That does not automatically mean the distributor has to close. But it weakens the reason for the distributor to exist unless it has other strong products or a broader platform.

Higher Rates Made The Sales Conversation Harder

The interest-rate environment changed the way investors compared income products.

When rates were low, nontraded real estate products could look more attractive to clients searching for yield. Real estate income, preferred stock distributions and alternative products had a stronger place in the conversation.

When rates rose, the comparison changed.

Clients could find meaningful yield in cash, Treasuries, CDs and money market funds. Those options are generally easier to understand, easier to price and easier to exit. That made nontraded real estate products work harder for attention.

The New Investor Question

The client question became simple:

Why should I accept complexity and limited liquidity if I can earn income from something simpler?

That question does not make nontraded real estate products unsuitable by default. Some clients may still need or want private real estate exposure, preferred securities or alternative income strategies. But the advisor has to explain the trade-off more clearly.

A yield-focused pitch is no longer enough.

Why Advisors Became More Selective

Advisors have to defend their recommendations. When clients have simple alternatives, advisors become more selective about complex products.

They need to know:

Why the product belongs in the portfolio.
How long the client should hold it.
What happens if liquidity is needed.
How distributions are funded.
What fees reduce returns.
What risks are tied to the sponsor and property type.
Whether simpler options could accomplish the same goal.

That is a higher standard than the nontraded REIT market faced during easier fundraising periods.

Public REITs Became A Cleaner Comparison

InvestmentNews noted that some advisors were reconsidering publicly traded REITs after a difficult real estate year.

That comparison is important. Public REITs are not risk-free. Their prices can fall, sectors can underperform and rising rates can pressure valuations. But they have advantages that matter in advisor-client conversations.

Public REITs are easier to trade. Their prices are visible. They can be accessed through ETFs, mutual funds or individual securities. Clients can see the market value. Advisors can benchmark performance more easily.

Why Public REITs Pressure Nontraded Products

A nontraded real estate product has to justify why the client should accept:

Less liquidity
Less frequent pricing
More complex fee structures
More reliance on sponsor reporting
Potential redemption limitations
Longer holding periods

The answer may be valid for some clients. But it must be specific.

For example, a client may accept illiquidity for a long-term real estate strategy if the product has strong sponsor support, a clear income source and a role that public REITs do not fill. But if the product is being sold mainly for yield, the comparison becomes harder.

Fundraising Data Shows A Tougher Market

InvestmentNews cited data from Robert A. Stanger showing public nontraded REIT fundraising at $5.7 billion in 2025, compared with $6.1 billion in 2024.

That is not a collapse, but it is not strong momentum either.

For small distribution firms, flat fundraising can be painful. These firms need energy in the category. They need advisors to ask questions, platforms to review offerings and clients to remain open to the product structure.

Why Flat Fundraising Hurts Smaller Firms More

Large alternative managers can survive slower fundraising because they have broader businesses, stronger brands and deeper distribution teams. Smaller broker-dealers often have fewer ways to absorb category weakness.

A small distributor still has compliance costs, personnel costs, registration costs, marketing needs and advisor-support obligations. If product fundraising slows, those fixed costs become harder to justify.

That is why Ashford Securities’ closure is not only a story about REITs. It is also a story about scale.

The Blackstone Problem For Small Distributors

InvestmentNews quoted an industry executive who said it is harder for smaller broker-dealers to compete with large firms such as Blackstone, especially in real estate funds.

That is a major point.

The alternative investment marketplace has become more institutionalized. Large asset managers have national distribution teams, advisor education programs, brand recognition, due diligence support and platform relationships. They can make advisors feel more comfortable with complex products because they bring scale and familiarity.

A smaller distributor may know its product deeply, but it may not have the same reach or advisor confidence.

Why Brand Matters In Alternative Products

Advisor confidence matters because alternative investments are harder to explain than plain-vanilla mutual funds or ETFs.

When advisors recommend a complex product, they want to trust the sponsor. They want due diligence support. They want client materials. They want confidence that the product will still be supported after the sale.

Large brands often have an advantage in that environment.

That does not mean large products are always better. It means small distributors have to work harder to prove their value.

The SEC Risk Map For Nontraded REITs

The SEC’s investor bulletin on nontraded REITs outlines several risks that investors should understand before buying these products.

Those risks are central to the Ashford Securities story because they are exactly the points advisors now need to explain more carefully.

Liquidity Risk

Nontraded REITs and related products can be hard to sell. Investors may need to wait for a liquidity event, listing, liquidation or limited redemption opportunity.

That can be a serious issue if the client needs cash unexpectedly.

A client with a short time horizon, uncertain income needs or limited liquid assets may not be a good fit for an illiquid real estate product.

Fee Risk

Nontraded products can include high upfront and ongoing fees. Those fees can reduce the amount of money actually invested and can lower total returns.

This matters because clients may focus on the distribution rate without understanding the cost structure behind the product.

Distribution Risk

Investors may be attracted by income payments, but they need to know where those payments come from. In some nontraded REIT structures, distributions may come from sources other than operating earnings, including borrowings or offering proceeds.

That does not automatically make the distribution improper. But it changes how investors should understand the income.

Valuation Risk

Because nontraded products do not trade on exchanges, investors may not have a daily market price. Valuations may depend on appraisals, periodic estimates or sponsor reporting.

That can make it harder for investors to know what the investment is worth at any given time.

Conflict Risk

Nontraded REITs are often externally managed. That can create conflicts if affiliates, sponsors, managers or distributors receive fees tied to acquisitions, assets, services or product sales.

Clients need to understand who gets paid and how.

Preferred Dividends Changed The Investor Conversation

InvestmentNews reported that Ashford Hospitality Trust said it suspended preferred dividends to maintain liquidity while evaluating strategic alternatives.

That is a major issue for investors because preferred securities are often purchased for income.

When dividends are suspended, even temporarily, the product’s story changes. The investor is no longer only asking whether the yield is attractive. The investor is asking whether the company has enough liquidity, whether the income will resume and what the security is worth if payments stop.

Questions Advisors Need To Be Ready For

Advisors may need to answer client questions such as:

Why did the dividend stop?
Was this risk disclosed before purchase?
Will unpaid dividends accrue?
What does the suspension say about company liquidity?
Can the client sell the position?
Is there a market for the security?
Does the client need to keep holding?
Was the original allocation too large?

Those questions can be uncomfortable, but they are necessary. A client who bought for income will care deeply if the income stops.

Braemar’s Strategic Review Added Another Layer

InvestmentNews also reported that Braemar Hotels & Resorts said it was exploring a potential sale.

A strategic review can mean several things. It may lead to a sale, merger, asset transaction or no transaction. It may help unlock value. It may also create uncertainty while investors wait for clarity.

For a product distributor, uncertainty can slow sales. Advisors may pause. Clients may wait. Due diligence teams may ask for more information. Platform partners may become cautious.

Why Strategic Uncertainty Affects Distribution

Alternative products are often sold on confidence. The advisor must feel confident. The client must feel confident. The platform must feel confident.

When related companies are reviewing strategic alternatives, suspending dividends or closing offerings, that confidence becomes harder to maintain.

That does not mean the product ecosystem has no value. It means the sales process becomes much more difficult.

What This Means For Advisors

Advisors should treat Ashford Securities’ closure as a reminder that product-distribution risk matters.

When reviewing nontraded real estate products, the advisor should not only ask whether the product looks attractive. The advisor should ask whether the entire support system behind the product is durable.

Product Questions

Advisors should review:

The sponsor’s financial strength
The property type and market exposure
The dividend or distribution source
The debt and refinancing profile
The valuation process
The redemption or liquidity terms
The fee structure
The product’s role in the client’s plan

Distribution Questions

Advisors should also ask:

Who supports the product after sale?
Is the dealer manager stable?
Is the offering still active?
Are platform relationships broad or narrow?
What happens if the distributor shuts down?
How will investors receive updates?
Who handles advisor questions?

That second set of questions is often overlooked. Ashford Securities’ shutdown shows why it matters.

What This Means For Investors

Investors should not panic simply because a distributor shuts down. The key issue is the underlying investment.

If an investor already owns a nontraded real estate product, the important questions are:

Who is the issuer?
Who manages the assets?
Are distributions still being paid?
If distributions stopped, why?
Is there a redemption program?
What valuation information is available?
What communications has the sponsor provided?
What role does the investment play in the overall portfolio?

Investors should ask their advisor to explain the product clearly and update the original rationale.

Why The Original Reason For Buying Matters

If the product was purchased for long-term real estate exposure, the investor should review whether that thesis still holds.

If it was purchased mainly for income, the investor should review whether the income remains reliable.

If it was purchased for diversification, the investor should compare whether the liquidity limits and fees still make sense beside other options.

The reason for buying should guide the next decision.

The Suitability Standard Is Getting Harder To Meet

The suitability conversation around nontraded real estate is becoming more demanding.

It is not enough to say a client is wealthy enough to own an illiquid product. The advisor has to show why the product fits the client’s goals, time horizon, risk tolerance and liquidity needs.

The Client Profile Must Fit The Product

A suitable client usually needs:

A long enough time horizon
Enough liquid assets outside the product
Comfort with limited exit options
Understanding of the fee structure
Ability to tolerate income disruption
Ability to tolerate valuation uncertainty
A clear reason for real estate exposure

If those conditions are not present, the recommendation becomes harder to defend.

How This Changes The Alternative Investment Conversation

Alternative investments still have a place in wealth management.

NJ Financial News has covered how firms continue to use alternative investments as part of broader advisory growth and differentiated planning.

But the Ashford Securities story shows that not every alternative product distributor will benefit equally from that demand.

The market is likely to reward:

Larger sponsors
Clearer liquidity structures
Better reporting
Stronger education
More transparent fees
Broader platform access
More durable distribution support

The market is likely to punish:

Narrow product shelves
Weak sponsor balance sheets
Hard-to-explain income sources
Poor liquidity terms
Limited advisor support
Products that depend too much on easy capital conditions

That is the real lesson.

Advisor FAQ: What To Explain To Clients Now

If A Client Owns A Nontraded REIT-Related Product
The advisor should explain what the client owns, who manages it, whether income is being paid, what liquidity options exist and how the product fits the overall plan today.
If A Client Is Considering A Similar Product
The advisor should compare the product with simpler alternatives, including public REITs, bond funds, money market funds, Treasury strategies or other income options. The advisor should explain why the nontraded structure is worth the trade-off.
If A Client Asks About Dividend Suspensions
The advisor should explain whether dividends are cumulative, whether unpaid amounts may accrue, why the issuer suspended payments and how that affects the client’s cash-flow expectations.
If A Client Needs Liquidity
The advisor should review redemption terms, potential discounts, secondary-market options and whether selling is possible at all. The advisor should also review whether the original allocation left enough liquidity outside the product.
If A Client Asks Whether Nontraded REITs Are Bad
The advisor should avoid a blanket answer. Nontraded products can be appropriate for certain investors, but only when the client understands the risks and the product fits the plan.

What To Watch Next

The next signal is whether more small alternative-product broker-dealers consolidate, shut down or narrow their product shelves.

Also watch where advisors send new real estate allocations. If more money moves toward public REITs, large private real estate platforms, interval funds or diversified alternative vehicles, it would suggest advisors still want real estate exposure but prefer structures with stronger support or clearer liquidity.

Key Market Signals

The most important indicators will be:

Public nontraded REIT fundraising trends
Advisor platform approvals for new real estate products
Dividend suspensions or reinstatements
Strategic reviews among REIT sponsors
Public REIT performance
Investor demand for liquidity
Large alternative manager inflows
SEC and FINRA attention to product sales practices

Those signals will show whether Ashford Securities’ closure was isolated or part of a larger shakeout.

Ashford Securities’ Shutdown Is A Warning About Narrow Product Distribution

Ashford Securities’ closure is not the end of nontraded real estate investing.

It is a warning about narrow distribution models in a more skeptical market.

Small broker-dealers tied to specific alternative product shelves face a harder environment now. Higher rates gave investors easier income options. Public REITs created simpler comparisons. Large asset managers gained distribution power. Dividend pressure and strategic uncertainty made certain offerings harder to explain.

That does not mean every nontraded real estate product is unsuitable. It means the burden of explanation is much higher.

For advisors, the lesson is to treat nontraded real estate as a planning decision, not a yield shortcut. For investors, the lesson is to understand liquidity, fees, valuation and income risk before buying. For product sponsors, the lesson is that distribution strength now depends on transparency, scale and confidence.

Ashford Securities is shutting down. The bigger warning is that clients and advisors are less willing to accept complexity without a very clear reason.