By Stephen Cassidy, President
(Aaron Houston NJBIZ)
Commercial real estate has traditionally been a close knit group and investments in private offerings have historically only been available to institutions or individuals who met certain financial criteria. Marketing these private placements was strictly enforced, limited primarily to existing relationships and therefore only a select group ever had the chance to participate.
At Denholtz Associates we place tremendous value on the long time personal and professional relationships that we have and will continue to have with our existing investors. Nevertheless, we recognize that the marketplace is changing and with that change comes new and exciting opportunities.
As Benjamin Franklin once said “When you’re finished changing, you’re finished!”
Enter Crowd Funding. Crowd funding of business ventures and other personal causes has over the past several years has become more popular. Companies like Kickstarter and GoFundMe have given companies a chance to offer crowdfunded investment opportunities to anyone with a computer and a digital form of payment.
In September 2013, pursuant to Title II of the Jumpstart Our Business Startups Act (JOBS ACT), the Securities and Exchange Commission created the Red D Rule 506(c) exemption. This meant for the first time companies were allowed to advertise private placement offerings directly to accredited investors*. Some have called this change the democratization of capital and I agree! While sponsors (crowdfunding platforms) still have a burden to obtain proof that investors meet the new accredited investor rules, the universe of potential investors has grown exponentially.
Well established sponsors and operators (companies looking for investors like Denholtz Associates) are in a unique position to capitalize on this new access to capital. Our remarkable sixty plus year history gives investors who may be new to real estate comfort that they will have experienced professionals working for them.
Partnering with established and credible funding platforms like CrowdStreet.com further enhances this opportunity for both sponsors and investors. Sponsors get access to new investors that have been pre-qualified and can launch their own platforms like denholtzinvestors.com. Investors get access to an investment that has been reviewed by real estate professionals and comes with high levels of transparency.
Count us in!
*Per Rule 501, an accredited investor is an investor who earns a minimum of $200,000 per year as a single person or $300,000 if a married couple; or has a minimum net worth of $1 million, excluding their personal residence.