Rosemarie Thurston, Jason Goode and Martin Dozier participated in this conference hosted by Information Management Network (IMN).
Rosemarie Thurston served as conference co-chairperson and moderated the session "Non-Traded REIT CEO/President Panel: Chasing Retail $ - Where’s the Next Market Opportunity?," June 24, 10:15am-11:00am. The presentation addressed the following questions:
- After a slight fundraising setback last year, what is your take on the current health of the Non-Traded REIT market? Where do you see the greatest market opportunity in the near term? Long term? How are you positioning to take advantage?
- FINRA RN 15-02: How are you responding? Will you reduce/eliminate front end fees? What product structures are you considering as a result? Are you/will you develop multiclass deals? What are their pros and cons from a sponsor perspective? Will C shares hit the REIT world in full force? What is your take on Daily NAV products? What should product structures look like in this evolving regulatory climate? How will distribution strategies change as a result?
- How are you viewing competition for retail investor $ from the growing number of retail alternative product launches? Is brand names such as Blackstone and KKR entering the market a good or bad thing? Why?
- If you haven't already, are you jumping on the alternatives bandwagon and diversifying into other retail investment products? If so, which and why? If not, why not?
- How are you addressing Broker/Dealer and RIA concerns and better meeting retail investors needs? Why do RIAs tend to prefer other alternative investments to Non-Traded REITs? How can this trend be reversed?
- With continuing market consolidation on both the sponsor and Broker/Dealer side, where do you see the industry in 12-18 months' time? What is your top priority today as a result? Keeping you up at night?
Jason moderated the session "FINRA RN 15-02 – Preparing for the Coming Change: Sponsor and Broker/Dealer Perspectives," June 25, 9:45am-10:30am. FINRA RN 15-02 substantially alters the regulatory and business environment for Non-Traded REIT & BDC securities. In this panel the speakers discussed some of the pressing questions sponsor organizations and Broker/Dealers are now facing and the changes that 15-02 necessitates in the various facets of their business. Among the points addressed:
- How will FINRA RN 15-02 impact the volume of Non-Traded REIT & DPP sales? Are Broker/Dealers looking at a potentially substantial reduction in revenue and, if so, what strategies are now being considered to make-up for this?
- What new deal structures will we see in response to the regulation?
- How does a BDC's NAV as determined under the 1940 Act differ from a REIT's appraised value for purposes of FINRA 15-02? Does the REIT or BDC have an advantage in the calculation? How will NAV work with multiple share classes? Can you add share classes after a registration is effective?
- How will revenue sharing agreements between Dealer Managers and Broker/Dealers be impacted by the new rule? How long should Broker/Dealers continue with current statements before switching to the new account statements?
- How are Broker/Dealers going to educate advisors on the changes for 2016, what are they planning as a client communication and how will they market REITS in the new world?
Martin was a featured speaker on the panel "Is the Rise of Non-Traded BDCs Set to Continue? Examining Market Drivers & Market Outlook," June 24, 2:00pm-2:45pm. With 13 Non-Traded BDCs that have raised approximately $12 billion between them and more in registration, this market sector continues to go from strength to strength.
- What is driving the Non-Traded BDC market? Will we see an influx of new product? How many can the market sustain?
- Master-feeder BDCs and multishare class BDCs: Are they the future of BDCs? Why?
- How flexible is the BDC as a wrapper for an investment product? What opportunities and limitations does it pose for an issuer considering offering a BDC?
- Does the BDC model lend itself easily to the non-traded structure, given the recent volatility and deviations that traded BDC share prices have experienced relative to their NAV?
- What are the key valuation considerations for Non-Traded BDCs?
- Is a BDC's performance and deal flow dependent more on the relationships that the BDC's adviser has or the current lack of available capital for borrowers? If the former, how does a new entrant demonstrate its performance capability? If the latter, does the increased number of Non-Traded BDCs risk reducing the number of available deals? Is there a risk that credit standards will slip in the hunt for deals?
- To what degree is there the same shelf space for Non-Traded BDCs as there has been for Non-Traded REITs? Should BDCs and REITs be considered similar products for purposes of a state's concentration limit? If not, how do their risk-return profiles differ?
- How does the regulatory oversight of a BDC differ from that of a REIT?
- How does the liquidity strategy for BDCs differ from REITs? Are BDCs better able to self-liquidate by letting the loans mature and simply distributing the proceeds to investors? Or is listing the ideal liquidity event for a BDC? What is the outlook for more liquidity events next year?
Alston & Bird was a sponsor of the event.
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June 24-25, 2015
The Conrad Hotel / New York, NY