Wednesday, October 10th, 2018 and is filed under AI Insight News
Total AUM for the non-traded REIT market remained steady in Q2 2018 at $86.2 billion, a tiny slice of the $1.145 trillion traded REIT market.
- Open programs represent $19.5 billion or 23% of this total, a larger percentage than prior quarters as capital raise has increased for active NTRs and older generation NTRs have liquidated assets.
- In terms of sector exposures, the industry is primarily allocated to diversified programs at 67.2% of total AUM, with healthcare/data center and industrial programs the closest competitors at 9.8% and 8.2% of total AUM, respectively.
AI Insight is introducing Industry Reporting in the first quarter of 2019, which will include this and many more insights into the key non-traded markets. To inquire about accessing these expansive data reports, please contact us directly.
Tuesday, October 9th, 2018 and is filed under AI Insight News
Hear from Sales Consultant Andy Van Erp about how AI Insight can help you get the training, education and research tools you need to work with complex products, and easily manage your compliance requirements. View vlog
Friday, October 5th, 2018 and is filed under AI Insight News
Last week AI Insight attended the annual IPA Vision and Due Diligence Symposium hosted by the Institute for Portfolio Alternatives in Chicago, IL. AI Insight CEO & President Sherri Cooke presented updates on the current state of the alternative investment industry.
Here are three key takeaways to consider:
- Qualified Opportunity Zone investments are quickly gaining interest. While there’s not yet any product available, there was a lot of excitement around Qualified Opportunity Funds. Discussions about potential benefits for gain deferral and tax exclusions were balanced by the possibility that capital gains rates may be higher in the future. No matter what, offering these investments will require significant education.
- States move toward implementing “best interest” regulation. While the DOL Fiduciary Rule is dead, the SEC’s Proposed Best Interest Regulation has prompted states like Nevada and New Jersey to move toward issuing their own fiduciary rules to govern brokerage firms in their respective states. Other states are expected to follow with fiduciary standards for both broker dealers and RIAs indicating the essence of the DOL rule still exists.
- Transparency continues to be a key priority. Establishing and implementing consistent due diligence policies and procedures continues to be a priority as regulators take a closer look at usage of complex investments. RIAs are following suit with broker dealers by creating more robust reviews around operations, legal documents and on-site visits to improve transparency.
Thursday, September 13th, 2018 and is filed under AI Insight News
A review of private placements on the AI Insight Platform:
1031 Exchange Programs
- There were 7 new 1031 programs activated on the AI Insight platform in August for a total of $228.6 million in total offering amount, with 56 activated YTD as of the end of August for a total offering amount of $1.6 billion.
- The aggregate August offering amount was above July levels. However, the YTD gains have slowed, down from 70% to 51% above 2017 YTD levels.
- The industry remains dominated by the top sponsor, who represents 29% of the offering amount YTD. However, several new sponsors have entered the market this year, taking some of the market share from the top sponsor.
Click here to view more AI Insight Private Placement data and charts.
Thursday, August 30th, 2018 and is filed under AI Insight News
We recently enhanced our reporting capabilities for non-traded REITs to include the ability to sort and review programs by their investment structure, strategy, and primary sector allocation. These enhancements allow subscribers to more efficiently run comparative reports on programs with similar structures and strategies.
Structure
The first enhancement allows you to sort programs by their investment structure – lifecycle or perpetual.
Lifecycle REITs:
- Are intended to have a finite life with distinct stages as a new portfolio is built.
- Typically target a timeframe of five to seven years, with phases including capital raise, growth, maturation, and liquidation.
- Can be purchased only during the capital raise phase at a set public offering price and their NAV is determined no later than 150 days following the second anniversary of breaking escrow. Redemption options for lifecycle REITs are limited until the liquidation phase.
Perpetual REITs:
- Are intended to be managed for a long period of time with no set liquidity phase.
- Many include language in their offering documents that allow for a liquidation, including converting to a publicly traded REIT, but the goal is less about the liquidation than the management of the portfolio.
- Can be purchased or redeemed at any time at the most recent NAV, which is typically determined either monthly or quarterly, however, limitations still apply.
As of August 28th, 2018, the open non-traded REITs on the AI Insight platform include nine perpetual REITs and 12 lifecycle REITs. Based on first quarter 2018 data, the nine perpetual REITs represented 75% of total assets.
Strategy
The second enhancement allows you to sort programs by their investment strategy, which helps to define a program’s risk and return characteristics. The non-traded REITs on the AI Insight platform fall into one of the following five categories, which are based on definitions from CAIA and Preqin: Core, Core-Plus, Value-Add, and Opportunistic. Core programs are theoretically lower risk with lower return potential while opportunistic programs may provide higher returns with higher risk. AI Insight also includes mortgage REITs as an investment strategy, which have a distinct risk return profile.
- Core: Core strategies look to acquire assets that achieve a relatively high percentage of their return from income and are expected to have lower volatility. These tend to be the most liquid, most developed, most recognizable assets in a portfolio. The majority of returns come from cash flows with little appreciation expected. As of August 28th, 2018, there were 13 open programs on the AI Insight platform with a Core investment strategy, representing 84% of NTR AUM.
- Core-Plus: Core-Plus real estate funds invest in moderate risk real estate that provides moderate returns. Investments are predominantly core but with an emphasis on a modest value add approach. These funds typically focus on the main property types in both primary and secondary markets, investing in class A or lower quality buildings that require some form of enhancement. As of August 28th, 2018, there were five open programs on the AI Insight platform with a Core-Plus investment strategy representing 14% of NTR AUM.
- Value-Add: Value-Add programs look to acquire assets that have one or more of the following attributes: (i) achieving a substantial portion of returns from appreciation, (ii) moderate volatility, and (iii) not having the reliability of core properties. This can include hotels, resorts, assisted care living facilities, hospitals, storage, data centers, etc. These properties require a sub-specialty within the real estate market to be managed well and can involve repositioning, renovation or redevelopment. These programs focus on growth and income where opportunities created by dislocation and inefficiencies within segments are capitalized upon to enhance returns. As of August 28th, 2018, there were three open Value-Add programs on the AI Insight platform, representing 0.8% of NTR AUM.
- Opportunistic: Opportunistic programs look to acquire assets that have little or no current cash flow and will derive a substantial part of their return from appreciation. These funds tend to have more equity like characteristics, may have high rollover risk and less liquidity. These are generally distressed properties, new development properties or properties in emerging markets. As of August 28th, 2018, there were no open Opportunistic programs on the AI Insight platform.
- Mortgage: Mortgage programs invest substantially all of their capital raised in commercial real estate mortgages, debt or other real estate fixed income securities. As of August 28th, 2018, there were two open mortgage focused programs on the AI Insight platform representing 0.5% of NTR AUM.
For more information on the characteristics of each of the investment strategies, click here and here.
Sector
While the AI Insight platform has always included a sector review, we have streamlined this section to highlight each program’s overarching sector or sectors. This allows subscribers to more efficiently compare and sort programs within each of the primary sector categories. The included pie chart illustrates the allocation to the different sectors for open NTRs on the AI Insight platform with data as of Q1 2018.
Access
Subscribers to the AI Insight platform can access, download, and customize the data related to non-traded REITs on the AI Insight website, using comparative reports and the financial performance reporting tools.
Chart Source: AI Insight
Thursday, August 23rd, 2018 and is filed under AI Insight News
A review of private placements on the AI Insight Platform:
- There were 7 new 1031 programs activated on the AI Insight platform in July for a total of $187.4 million in total offering amount, with 49 activated YTD as of the end of July for a total offering amount of $1.4 million.
- Eight Energy programs have been activated YTD with $474.1 million in maximum offering amount.
- 26 non-1031 real estate focused private placement programs have been activated on the AI Insight platform so far in 2018, including two private non-traded REITs. This year’s private placement group includes two sponsors that formerly offered public non-traded REITs but have switched back to the private placement structure.
Click here to view more AI Insight Private Placement data and charts.
Friday, August 3rd, 2018 and is filed under AI Insight News
Non-Traded Closed-End Interval Funds Industry Insights – Second Quarter 2018
Data as of last reporting periods
- According to public filings, as of the end of Q2, 2018, there were 44 active closed-end interval funds:
- Total net assets were $24.2 billion, an increase of 9.61% over the prior AI Insight reporting period.
- Full year-end 2017 returns ranged from (-9.00%) to 25.52% with an average of 6.62%.
- Many of the funds have not reported returns for 2018 yet, although of those that have, the average is in line with 2017 numbers.
For more detailed NT Closed-End Interval Funds 2Q18 data, click here.
Friday, August 3rd, 2018 and is filed under AI Insight News
Non-Traded BDC Industry Insights – First Quarter 2018
Data as of March 31, 2018
- As of March 31, 2018, there were four open non-traded BDCs offered by four sponsors.
- Capital raise in the non-traded BDC space has been steadily declining since the peak in 2013.
- According to public filings, 2017 was the slowest year on record and 2018 is trending to come in even lower.
For more detailed BDC 1Q18 data, click here.
Wednesday, August 1st, 2018 and is filed under AI Insight News
Non-Traded REIT Industry Insights – First Quarter 2018
Data as of March 31, 2018
- Open and closed NTRs reported a total raise of $1.3 billion during the first quarter of 2018, an 8% decrease from the prior quarter.
- During Q1 2018, there were 23 open non-traded REITs offered by 19 sponsors.
- Blackstone REIT represented 60% of the $1 billion raised by open programs during the quarter.
For more detailed NTR 1Q18 data, click here.
Monday, July 9th, 2018 and is filed under AI Insight News
A review of private placements on the AI Insight Platform.
1031 Exchange Programs
- There were 10 new 1031 programs activated on the AI Insight platform in June for a total of $302.4 million in total offering amount, with 42 activated YTD as of the end of June for a total offering amount of $1,198.7 million.
- The aggregate June offering amount was well above May levels and YTD is approximately 68% above 2017 YTD levels.
- Inland Private Capital remains the top sponsor in the industry with 32% of the offering amount YTD. Passco Companies, LLC comes in at second with 12% of offering amount YTD, while the remainder of the programs were evenly spread between different sponsors.
- One new sponsor entered the market in June with one offering.
- Multifamily and net lease programs continue to dominate the space, with 60% and 13% of offering amounts YTD, respectively. Student housing represented just under 8% and healthcare represented approximately 5%.
- ON DECK: As of July 5th, two DST programs were activated in July with one coming soon.
Energy
- Five energy focused programs were activated in June, for a total of nine programs YTD with $499.1 million in maximum offering amount.
- A large program focused on drilling activated in June, which puts the sector ahead of its 2017 run rate – a welcome sign after a few dismal years.
- Energy focused private placements are still well below their 2013-2014 peak, which corresponds with oil pricing trends. The entire energy industry has seen significant consolidation, debt reduction, and restructuring. It remains to be seen whether the private placement structure can thrive once again after all of these changes.
Real Estate
- 20 non-1031 real estate focused private placement programs have been activated on the AI Insight platform so far in 2018.
- As of June 30, 2018, the total maximum offering amount for real estate focused funds was over $1.5 billion, which more than doubles the total offering amount of $688 million for the full year 2017.
- ON DECK: As of July 5th, there was one non-1031 real estate private placement programs coming soon.
Other
- One private equity program activated in June, bringing the total for private equity/debt programs to three for the year.
- Preferred programs are slightly below 2017 levels, with no new activations in June.
- Three conservation easement programs have activated so far in 2018, This is on par with 2017; however, the year was back-end heavy with 24 programs for $294 million offered between May and the end of 2017.
- One private non-traded REIT activated in June.
- ON DECK: As of July 5th, there was one hedge fund program coming soon.
| Glossary:
Activated: Program and education module are live on the AI Insight platform. Subscribers are able to view and download data for the program and take the education module. |
| Charts Source: AI Insight. Data as of June 30, 2018, based on programs activated on the AI Insight platform as of this date. |
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