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Private Capital Raising Activity Report Q4 2014

01/14/2015

 

The following is a quarterly report from Monetarex. Interested in learning more about Monetarex? Check out their review on Real Estate Tech News

TOTAL AMOUNT OF OFFERING, QUARTER OVER QUARTER

Monetarex has aggregated and reviewed the data in 708 Form D filings submitted to the SEC for the real estate industry group as of December 31, 2014, of which 344 are currently active. Total offering amount stands at approximately $7.5 billion as of December 31, 2014, with the Total recorded capital commitments of $2.6 billion (or a 35% capital commitments rate). This represents a slower capital raising rate quarter over quarter (vs. 47% in Q2'14 and 40% in Q3'14) which may be explained by the November‐December holiday season. The total number of active Real Estate Private Placement filings across all sectors increased by almost 24% quarter over quarter, from 572 to 708. The average minimum investment for the quarter stands at approximately $389 thousand, is twice as large as reported in previous quarters. Private capital has been slightly more active in 2014 compared to 2013. Total offering amount in 2014 was $30.3 billion vs. $29.3 billion in 2013 (or a 4% year over year increase). At the same time the number of Form D filings jumped 19% year over year, indicating a decrease in the per deal size of the private real estate offerings. The average deal size in 2013 was $13.5 million compared to $11.9 million in 2014, a 12% decrease.

TOP TEN STATES BY AMOUNT OF OFFERING, Q4-2014

The geographic distribution of recorded capital commitments shows similar results from the previous quarter. California continues to outpace the other areas in terms of private real estate offerings with $1.4 billion in offerings spread across 130 deals (20% of total market activity). Out of $1.4 billion in offerings, only $234M (20% commitment rate) were received in capital commitments this quarter. Illinois is the second most active market for private deals in Q4'14 with $0.7 billion in offerings across 33 deals.

NUMBER OF DEALS PER DEAL SIZE, Q4-2014

Although information herein contained from sources believed to be reliable, Monetarex, Inc. makes no warranty or representation that such information is correct, and is not responsible for errors, omissions, or misstatements of any kind. All opinions expressed herein are those of the author and no statement should be construed as an offer to buy or sell any security. Trading all real estate investments and securities entails significant risks which can result in substantial financial loss; such risks should be fully understood prior to investment.

BREAKDOWN BY REAL ESTATE INDUSTRY GROUP, Q4-2014

The Commercial Sector was the most active category in Private Placement filings (32% of Total offering amount) representing $2.5 billion across 236 offerings. At just above 1% the Construction Sector has the lowest number of Private Placement filings during Q4'14 representing $94 million across 11 offerings. The Residential Sector stayed relatively flat quarter over quarter at around 20% of the total fundraising activity while the Commercial Real Estate Sector experienced a 4% increase over the same period of time.

AGGREGATED OFFERINGS BY INDUSTRY GROUP OVER LAST 4 QUARTERS

In the past four quarters, the Commercial Real Estate Sector led the Private Placements space both in terms of the number of active offerings as well as recorded capital commitments. In Q4'14, out of $2.6 billion in Total recorded capital commitments, $993 million was placed into the Commercial Real Estate Sector offerings. Overall, during 2014 out of $12.3 billion in Total recorded capital commitments across all Private Placement filings, $3.9 billion was placed into the Commercial Real Estate Sector offerings.

OFFERING BY SECURITY TYPES, Q4-2014

Currently, equity is clearly the preferred security type for real estate offerings. This capital structure data is in line with the results reported through December 31, 2014. Pooled Investment Fund Interests are the second most popular alternative to equity.

DEALS WITH COMMISSIONS AND FEES, Q4-2014

OFFERINGS FILLED UNDER RULE 506(c), Q4-2014

We have analyzed the impact of new general solicitation rules that SEC approved as part of the JOBs Act on private placements filings for Q4'14. According to the Form D filings, the Total offering amount in New Rule 506(c) offerings for the Real Estate sector is $1.1 billion with 63 offerings filed in Q4'14 (13% quarter over quarter increase in offerings filed). This figure represents 15% of the adjusted Total offering amount across all Form D filings. The Total recorded capital commitments were $185 million (or a 17% capital commitments rate) with the average minimum investment of $21 thousand.

Notes:

As we discussed in the last report, we expected that the total capital raised would stay in the $6B-$8B range in Q4’14.

Private capital stayed active in Q4’14 at a $7.5 billion level in total capital offerings. It is now evident that the Q3 2014 drop in private capital raising activity was temporary. Currently, there are no indicators of a possible slowdown in the commercial real estate activity.

Private capital has been slightly more active in 2014 compared to 2013. Total offering amount in 2014 was $30.3 billion vs. $29.3 billion in 2013 (or a 4% year over year increase). At the same time the number of Form D filings jumped 19% year over year, indicating a decrease in the per deal size of the private real estate offerings. Average deal size in 2013 was $13.5 million compared to $11.9 million in 2014.

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