What Reg A+ Offering Means to Private Real Estate Investing

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Real estate stocks have been a popular portfolio diversifier for the last couple of decades. With the right portfolio composition, an investor may enjoy excellent returns, predictable cash flow, tax advantages and much more.

Direct real estate investments, however, necessitate a lot of hard work — it's sweat equity. To ensure success and an attractive return on that investment, you would expect to spend a significant amount of your time dealing with tenant issues, property maintenance, and capital improvements - not to mention insurance and property taxes. In short, it's expensive and time-consuming to own core real estate. 

For this reason, many investors looking for the benefits of real estate investments without the headaches opt for accessible real estate investment options like real estate investment trusts (REITs) and private equity real estate.

REITs vs Private Equity Real Estate

REITs and private equity real estate are both real estate investment vehicles that allow investors to seamlessly invest in real estate without having to own or manage physical properties. Real estate stock investments are more liquid than core real estate, allowing the investor to move in and out of a stock if the market happens to turn.

REITs provide a total return investment. Meaning, they are a highly liquid asset vehicle whose value is based on a combination of stock appreciation and the reinvestment of its dividends. This strong dividend income makes it an attractive inducement for both retirement savers and for retirees who need an income stream that can meet their living expenses.

Private equity real estate investment opportunities are positioned somewhere in between core real estate holdings and stock holdings. They offer certain advantages over REITs such as:

• More direct ownership of the actual properties since income is based on profitability instead of relying on volatile daily rates created by Wall Street
• In-house expertise on the investment cycle that can help improve the property
• Higher growth potential since private equity real estate companies offer dividends to investors only when there is cash flow. In contrast, REITs are required to pay at least 90% of taxable income to investors even if the assets are underperforming, which could truncate the growth of the asset.
• Less overhead since it does not require a large number of employees and brokers to manage, which could mean a stronger focus on the success of the asset

These investments typically require a considerable amount of capital and are generally available to accredited or high-net-worth investors. These investors either make over $200,000 in annual salary, $300,000 in joint salary (for spouses) or have over $1 million in net worth. 

However, as legislation continues to evolve, it is leveling the playing field. For example, non-accredited investors can participate in a Regulation A+ or Reg A+ offering. 

Significance of Reg A+ Offering in Private Equity Real Estate

Under the Obama administration, the Jumpstart Our Business Startups (JOBS) Act was signed to allow everyday investors to purchase shares that were traditionally reserved for accredited investors. With Reg A+, companies can raise funds (up to $75 million) from not just the wealthy but from the entire public. This provides a unique opportunity for anyone to access a sophisticated, private real estate investment.

Online offerings like Reg A+ allow a middle-market business to tap their clients and a growing global shareholder base to raise capital with more favorable terms. Both private real estate companies and investors can join to engage with a wider crowd and help existing customers convert into owners and shareholders into future customers.

Award-winning real estate companies like Caliber are taking advantage of the current market cycle to scale by offering accredited and non-accredited investors the opportunity to invest like an institution in its Reg A+ offering, which will close on February 26, 2021. Learn more here.

Caliber is one of the fastest-growing real estate investment companies in the Southwest with an asset base that has grown by more than 186% over the last 4 years. The company has a 12-year record of improvement with a 21% compounded annual growth rate (CAGR) from 2016. Its platform is rapidly expanding toward $1 billion in assets under management and development, helping thousands of investors to increase their wealth and gain access to private real estate investments.

"We believe that 2021 will be a year of opportunity and growth," stated Chris Loeffler, CEO and co-founder of Caliber. "We believe we have shown our resiliency over last year and proved out our business plan as we continue to grow and seize the capital markets and real estate opportunities." He added, "We believe we have tapped into something special through investing in distressed real estate and our recent Reg A+ offering. This demonstrates the holistic approach of our investment process where we can create long-term value for our customers, company and community."

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.