In this week’s video from The Street, Broadstone Real Estate CEO Amy Tait talks about the new Reg D solicitation rules under the JOBS act from the perspective of a leader of a company in the REIT and commercial property management spaces.
As written here before, recent deregulation of SEC rules concerning the raising of capital for investments including commercial real estate aim to make it easier for sponsors of investments to pitch those investments to more people. Recent passage of the Jumpstart Our Business Startups Act (JOBS) signed by President Obama has done away with older barriers to those kinds of solicitations.
New Rules, New Processes
According to Amy Tait, under the previous Reg D regime, sponsors of an investments were prohibited from public pitches including web communications, or any interviews concerning offerings. That’s over now, and a wave of crowdsourcing for commercial real estate investment is intensifying.
Reading of the SEC regs also shows their intent was to ensure that investors meet certain criteria of sophistication and wealth, which tended to limit the population to institutional investors or high net worth individuals.
It’s interesting to listen to Tait, a REIT assembler and manager discuss what has and hasn’t changed. The vetting of investors hasn’t changed — high net worth and institutional savvy are still highly sought after — but what has changes is the process of verification of the facts about the prospective investor.
Down To Brass Tacks
With a twinkle in her eye, Tait then does what couldn’t be done before, at least on-camera: pitches a pair of private non-traded REITs, one in triple-net retail, industrial and medical office properties, the other in residential. Of the net lease product, she announces the dividend is paying 6.6% , then touts a climbing share price and dividend sheltered from depreciation expense, plus happy investors.
One thing’s for sure: we can expect a great deal more communications from sponsors of REITs and other platforms/deals in the coming years under the new, more lax solicitation rules.