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Regulation A+ and Real Estate Funds

The streamlining of the old Regulation A program into Regulation A+ has been a game changer for companies seeking a sophisticated vehicle to generally solicit the public for investment and raise funding from all investors (accredited and non-accredited).

Regulation A+ has been especially popular with real estate fund sponsors.  Following are a few reasons why real estate sponsors are choosing Regulation A+ for executing syndications:

1.  Lower Audit Costs for Preparation:  Since most real estate funds execute as newly formed special purpose LLC’s or LP’s – the Tier 2 Regulation A+ audit requirement is applicable to the opening balance sheet only for that entity.  Most newly formed entities will have little to no financial activity so the audit cost is minimal (typically under $1,500).

2.  Real Estate is An Asset Class with Broad Appeal:  Real estate funds tend to do well syndicating capital in the public domain because the asset class in general is something average investors can understand and are comfortable with the investment exposure.

3.  The Nominal Cost and Timeframe Differences from Regulation D Provides a Much Better Syndication Vehicle:  Regulation A+ offerings do require nominally more time and expense to prepare and make ready for execution.  With that said – most real estate fund sponsors are not under purchase contract timelines since the funds are executing as a blind pool vehicle.  Further, since most real estate funds are raising larger amounts of capital – the Regulation A+ offering will provide substantially higher capabilities for successfully syndicating capital than a Regulation D offering.

Interested in Regulation A+?  Call us today to discuss!  (720) 586-8610.


Thursday August 19, 2021

Category: Capital Formation and Regulation D

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