Why Are REITs So Keen on Reg. A+?

The real estate industry had among the largest number of offerings and the largest total amount across issuers in Regulation A+ activity, according to an SEC white paper. Real estate was also one of the top five, two-digit SIC industries to be listed. Based on these numbers and recent Regulation A+ transactions, it is quite obvious that the real estate market is one to watch in 2017.

Regulation A+ securities offerings have surpassed past Regulation A offerings as of October 31, 2016, according to the white paper, and several issuers reporting proceeds were engaged in real estate “crowdfunding.” The paper also says several issuers in the real estate sector, including real estate “crowdfunding platforms,” have engaged in Regulation A+ offerings. One industry theory not mentioned in the paper is that REITs are attracted to crowdfunding models because both accredited and non-accredited investors can participate in the investment.

Nevertheless, all data points to the same direction, real estate, and an article in Crowdfund Insider confirms it. The Crowdfund article states that more real estate firms are launching their own crowdfunding platforms. In addition, a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack. We agree that real estate should be on our radar, but we must still outweigh the risk factors and valuations with these securities, the paper states. We will also have to see how many additional unregistered online REITs enter the Regulation A market.

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Top two-digit SIC industries
Rank Industry	Number of  offerings (%)	Number of  offerings
1  Business services	15%	22
2  Real estate	13%	19
3  Non-depository credit institutions	8%	12
4  Holding and other investment offices	8%	12
5  Depository institutions	7%	10
Rank Industry	Number of  qualified offerings (%)	Number of  qualified offerings
1  Business services	17%	14
2-4  Holding and other investment offices	12%	10
2-4  Depository institutions	12%	10
2-4  Real estate	12%	10
5  Non-depository credit institutions	7%	6
Rank Industry	Aggregate size of offerings (%)	Aggregate size of offerings ($ mln)
1  Holding and other investment offices	20%	$515
2  Real estate	14%	$377
3  Non-depository credit institutions	10%	$253
4  Business services	9%	$238
5  Communications	6%	$161
Rank Industry	Aggregate size of qualified offerings (%)	Aggregate size of qualified offerings  ($ mln)
1  Holding and other investment offices	30%	$445
2  Real estate	10%	$148
3  Depository institutions	10%	$146
4  Business services	8%	$119
5  Non-depository credit institutions	8%	$113

Source: SEC