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Regulation D Resources

The year is already coming to a close and, with the changing color of the leaves comes Regulation D Resources Fall Private Placement Capital Markets Update!

2017 has been a steady year with regards to Regulation D Private Placement Offerings. Slight volume volatility in April was the only outlier with the balance of the year at or above expected execution volume. Execution volume is approximately on par with 2016 which should lead to another year in the $1.5 trillion range insofar as total capital raised under the Regulation D programs.  Following is a summarized market update:

Real Estate:  Still the top sector by volume with apartment and multi-family class real estate transactions being the leading sector. We are also seeing some select residential development gaining traction and also focus on specialized care facilities.

Listing prices in the residential real estate market remain near historical highs while for-sale inventory continued to be in short supply in September, according to new data from realtor.com®. Inventory continues to sell at a rapid pace, moving 10 percent more quickly than in September 2017. The median age of properties on realtor.com in September is 69 days, which indicates that properties are selling eight days faster than this time last year- even as prices continue to reach double-digit growth.

Earlier this summer, the nationwide median home list price reached $275,000 for the first time. Now at $274,000, the median list price is still 10 percent higher than one year ago.

Approximately 85% of the real estate offerings executed were equity based offerings and approximately 30% intended on using leverage or external financing as part of the capital stack.  Other notable sectors in real estate were self storage facilities (acquisitions and new construction) and triple net properties.

Energy:  Oil and gas has had a solid year as the number two sector by volume.  Stabilized energy prices have contributed to renewed interest in development and also re-entry and re-work type transactions.

North Sea Brent crude oil spot prices averaged $56 per barrel (b) in September, an increase of $4/b from the average in August. EIA forecasts Brent spot prices to average $52/b in 2017 and $54/b in 2018, which is $1/b higher in 2017 and $2/b higher in 2018 compared with last month’s forecast. West Texas Intermediate (WTI) average crude oil prices are forecast to be $3.50/b lower than Brent prices in 2018. NYMEX contract values for January 2018 delivery that traded during the five-day period ending October 5 suggest that a range of $40/b to $65/b encompasses the market expectation for January WTI prices at the 95% confidence level.

We have seen a slight decrease in solar and wind based opportunities compared to 2016.

Technology:  Tech is our third highest volume sector with software applications leading the tech sector in execution volume.

85% of our transactional volume is 506(c) based offerings.  We are also seeing a significant number of clients using the RDR Investor Web Portal Application to promote the offering and manage the compliance and subscription processes.

The SEC’s elimination of Rule 505 has not had any negative impact as most issuers were not using the 505 exemption especially after the launch of 506(c). The 504 exemptions amount increase to $5mm is a benefit although most issuers at the higher end of that range should consider 506(c) unless they already have investors identified for the maximum offering amount.

Interested in executing a Regulation D Offering?  Call us today to discuss your planned offering:  (303) 984-4883.