Griffin Capital Securities Restructures, Targeting RIA and Wirehouse Expansion

Griffin Capital’s captive broker-dealer and distributor, Griffin Capital Securities LLC, has completed a strategic realignment of its sales organization, a process the company says began earlier this year.

The company’s sales professionals are now grouped into teams focused on three distribution channels: independent broker-dealers, registered investment advisors, and wirehouse firms.

Griffin Capital Securities CEO Mark Goldberg said the “channelization” move will help the company better serve its broker-dealer partners and their financial advisors across distribution channels, and noted that the new structure “is a more effective means by which to address the education and service needs of [their] advisor clients.”

According to industry sources, Griffin Capital Securities is seeking to expand distribution of its offerings in the wirehouse space, which is a new outlet for the firm.  One of its interval funds, Griffin Institutional Access Real Estate Fund (GIREX), was recently approved for distribution by Morgan Stanley.

National sales director Cory Calvert will continue to lead the company’s distribution and sales efforts with all internal and external wholesalers reporting directly to him. Brady Gallagher, an external wholesaler at the company for nearly six years, was promoted to divisional manager to help Calvert manage the company’s sales team. Gallagher will report directly to Goldberg.

Kevin Shields, chairman and CEO of Griffin Capital, said, “I could not be more pleased with this important step forward. Today we are better positioned to further develop our alternative investment asset management platform as an unmatched leader in service and support to our partner firms, financial advisors and the clients they serve.”

The company also added four new external wholesalers that will cover the IBD channel: Tom and John Dine in the Midwest territory, Alison Grant in the New England territory and Craig Arsenault in the Mid-Atlantic territory.

“I am thrilled to be reunited with four great wholesalers – they each represent an outstanding addition to the Griffin team,” stated Goldberg, who previously led distribution of WP Carey’s non-traded investment offerings.

Griffin Capital Securities’ current offerings include two interval funds (Griffin Institutional Access Credit Fund and Griffin Institutional Access Real Estate Fund), two non-traded REITs (Griffin Capital Essential Asset REIT II and Griffin-American Healthcare REIT IV), and one private offering (Phillips Edison Grocery Center REIT III). The private Phillips Edison offering is seeking to raise up to $220 million in equity prior to launching as a public, non-traded REIT, which will then seek to raise another $1.7 billion, according to registration filings with the US Securities and Exchange Commission.

Griffin Capital is an alternative investment asset manager with approximately $9.5 billion in assets under management. The firm manages, sponsors or co-sponsors a suite of investment programs distributed by Griffin Capital Securities to retail investors through a community of partners, including independent and insurance broker-dealers, wirehouses, and registered investment advisory firms.

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Capital Square 1031 Buys Atlanta Multifamily Property

Capital Square 1031, a real estate investment and management firm specializing in Delaware statutory trust investments, has purchased Fairway View Apartments, a 243-unit multifamily community adjacent to the Northwood Country Club golf course in the Lawrenceville suburb of Atlanta, Georgia. The purchase price was not disclosed.

Situated on approximately 20 acres, Fairway View Apartments is comprised of 26 two- and three-story residential buildings, as well as standalone clubhouse/office, laundry and maintenance buildings. The property’s one-, two-, three- and four-bedroom units average 1,089 square feet. Fairway View Apartments was 95 percent occupied at the time of acquisition.

“Fairway View Apartments is well located, near local businesses and major retail services in the Atlanta area,” said Seth Harris, executive vice president of investments. “Approximately 40 percent of the property’s units are townhomes, which is a desirable floor plan for many families. Also, the property is located in an excellent school district with top-rated public schools that have been recognized for high academic achievement.”

Louis Rogers, founder and chief executive officer of Capital Square 1031 added, “Fairway View Apartments is projected to generate stable cash flow and the potential for capital appreciation. This is desirable for many Section 1031 exchange investors who are seeking growth of income and capital appreciation in their replacement property.”

Community amenities include golf course views, a coffee and tea bar, playground, sports court, swimming pool, grill/picnic area, pet walk and care stations, outdoor amenity area, laundry facility and more.

Capital Square 1031 is a national real estate investment and management company that sponsors real estate exchange programs that qualify for tax deferral under Section 1031 of the Internal Revenue Code. Capital Square uses the Delaware Statutory Trust structure and provides a range of services, including due diligence, acquisition, loan sourcing, property management/asset management, and disposition, for high net worth investors, private equity firms, family offices and institutional investors. As of September 26, 2017, the firm oversees a national portfolio of 59 real estate assets valued at approximately $630 million (based on investment cost).

 

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Former LPL Broker Indicted for Multiple Counts of Securities Fraud and Theft

Colorado has indicted former LPL broker Sonya Camarco on six counts of securities fraud and seven counts of theft for allegedly diverting more than $850,000 in client funds for personal use between January 2013 and May 2017.

The indictment was the result of the investigative efforts of the Colorado Division of Securities, part of the Department of Regulatory Agencies. The case is being prosecuted by the Colorado Attorney General’s Office. Last month, the SEC obtained an emergency court order to freeze Camarco’s assets, as reported by The DI Wire.

“Cases involving securities professionals that we license and who are accused of theft of client funds are a top enforcement priority for us,” commented Colorado securities commissioner Gerald Rome. “It is imperative for us to act as swiftly as possible when a licensed investment adviser representative and broker-dealer sales representative is engaging in this kind of misconduct in our backyard.”

Carmarco became an investment adviser representative and registered representative for LPL Financial beginning in February 2004. Following an internal investigation by LPL in July of 2017 regarding a suspicious check drawn on a client account, it was discovered that numerous checks had been drawn on several accounts belonging to Camarco’s clients.

LPL Financial uncovered that Carmaco was endorsing checks from clients’ accounts made payable to an account she controlled. She deposited the funds into accounts for which she was the signatory, although her clients did not authorize the investment of their funds into the accounts. LPL terminated Carmarco’s employment early last month for her role in the alleged fraudulent investment scheme.

The indictment alleges that Camarco used client funds for various personal expenditures such as credit card payments, real estate, taxes, and automobile expenses.

The filing of criminal charges is a formal accusation that an individual committed a crime, and defendants should be presumed innocent until proven guilty.

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Rep. Wagner Introduces Bill to Replace Fiduciary Rule with Best Interest Standard

Rep. Ann Wagner (R-MO) has introduced a bill in the U.S. House of Representatives to repeal the Department of Labor’s fiduciary rule and replace it with a best interest standard of conduct for brokers.

If passed, The Protecting Advice for Small Savers (PASS) Act Of 2017 would give fiduciary rulemaking jurisdiction to the Securities and Exchange Commission, and would prevent the Treasury Department and the DOL from implementing fiduciary regulations on broker-dealers under The Employee Retirement Income Security Act of 1974. Wagner, an ardent opponent of the DOL’s fiduciary rule, released a discussion draft of the bill in July.

“The Department of Labor’s fiduciary rule is already hurting Main Street Americans by eliminating investment choices and raising costs,” said Wagner. “According to a recent study by the U.S. Chamber of Commerce, low and middle-income retirement savings investors have already begun to experience a negative impact on their ability to save and invest for their future as a result of the DOL’s regulatory overreach.”

Yesterday, The DI Wire reported that SEC chairman Jay Clayton testified before the Senate Banking Committee that working with the DOL to create a harmonized rule is his “top priority.”

The PASS Act will require broker-dealers to disclose compensation they receive and any conflict of interest that exists, and will preempts state laws avoiding a patchwork of standards.

Industry organizations that support the PASS Act include the U.S. Chamber of Commerce, Financial Services Roundtable, Securities Industry and Financial Markets Association, Financial Services Institute, National Association of Insurance and Financial Advisors, American Counsel of Life Insurers, and the Investment Company Institute.

The fiduciary rule, which is currently under review as directed by the President, attempts to reduce conflicts of interest in retirement investment advice and redefines who is considered an investment advice fiduciary under the Employee Retirement Income Security Act of 1974. Enforcement of the rule was recently delayed for 18-months until July 1, 2019.

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Strategic Student & Senior Housing Trust Buys Florida Student Housing Property

Strategic Student & Senior Housing Trust, Inc., a private real estate investment trust sponsored by SmartStop Asset Management LLC, acquired The Domain at Tallahassee, a 125-unit, 434-bed student housing property located one block from the campus of Florida State University in Tallahassee, Florida. The acquisition is the second for Strategic Student & Senior Housing Trust, raising its portfolio value to approximately $104.5 million, based on aggregate purchase price. The purchase price was not disclosed.

“The Domain at Tallahassee is a purpose-built, newly constructed and 100 percent leased student housing community located just a short walk away from Florida State University, which has more than 41,000 students,” said CEO H. Michael Schwartz. “The amenities-rich, Class A property features a modern suburban-wrap design, and fits well with our acquisition strategy of acquiring core, stabilized student housing assets adjacent to Tier 1 universities.”

Floor plans at the property range from one to four bedrooms, and each fully furnished unit includes one bathroom per bedroom. Community amenities include secure access, a 24-hour fitness facility, resort style pool, computer center, private study rooms, coffee bar and more. Incorporated throughout the property is a fiber optic cable with broadband speeds of one gigabit per second, which supports connectivity to multiple devices at a time.

Asset Campus Housing serves as the third-party manager of The Domain at Tallahassee. The property was developed by Asset Plus Companies, an affiliate of Asset Campus Housing, which requested SmartStop bid on the student housing community.

Founded in 1851, Florida State University has more than 41,000 students from every Florida county and 140 countries.

The DI Wire reported last week that Strategic Student & Senior Housing Trust filed a registration statement to launch a $1 billion non-traded real estate investment trust.

Strategic Student & Senior Housing Trust focuses on the acquisition of income-producing, Class A student housing and senior housing communities.

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Phillips Edison Grocery Center REIT II Closes New $200 Million Unsecured Loan Facility

Phillips Edison Grocery Center REIT II Inc., a publicly registered non-traded real estate investment trust, and operating partnership have closed on a new 7-year, $200 million unsecured term loan facility.

The facility lenders include Capital One N.A as administrative agent, and Fifth Third Bank, U.S. Bank N.A., Regions Bank, Associated Bank N.A., First Tennessee Bank N.A., First Merchants Bank, and First Financial Business Capital as co-syndication agents.

Proceeds from the term loan will be used to pay down the company’s revolving line of credit, as well as for general corporate purposes. The loan will bear interest at LIBOR plus 1.70 percent to 2.55 percent depending on the company’s leverage ratio.

“We are pleased to announce the closing of this 7-year unsecured term loan,” said Devin Murphy, chief financial officer of Phillips Edison Grocery Center REIT II. “The loan is a strategic component of our capital structure that enhances our liquidity profile while adding incremental term to our debt structure at an attractive cost. We continue to focus on maintaining a low risk, high quality balance sheet and want to thank our lending partners for their continued support.”

Phillips Edison Grocery Center REIT II invests in grocery-anchored neighborhood shopping centers having a mix of national and regional retailers selling necessity-based goods and services. The offering was declared effective in November 2013 and closed in September 2015 after raising $1.1 billion in investor equity. The company currently owns a retail portfolio of 80 properties purchased for approximately $1.6 billion, according to Summit Investment Research.

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Provasi Hires Former WP Carey and LPL Exec as Managing Director of Product and Marketing

Provasi Capital Partners LP has hired John Guthery as managing director of product and marketing to lead all product-related research, marketing, due diligence, and development initiatives for the firm. Guthery will report to CEO Frank Muller.

“John’s reputation across our industry is unparalleled and he brings an incredible acumen for product development to our company,” said Muller. “We believe his wealth of experience will further empower us to attract selected managers and strategies to our growing distribution platform.”

Prior to joining Provasi Capital, Guthery served as senior vice president and head of W. P. Carey’s product management division, where he led the strategy, design and structuring of new products.

He previously served as a senior vice president and head of manager due-diligence and strategy with LPL Financial Research. In his role, he oversaw research and due-diligence of active managers, including mutual funds, separate accounts, hedge funds, private equity funds, real estate products, structured products and other non-traditional asset classes.

Guthery earned a master’s degree in business administration from Babson College and his bachelor’s degree from Georgetown University. Additionally, he earned his chartered financial analyst designation in 1999 and is a member of the CFA Institute and the Boston Security Analysts Society.

Provasi Capital Partners offers access to investment strategies through a multi-manager approach presenting advisors and their clients with options for allocating capital, managing risk and diversifying assets.

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Blackstone REIT Continues Torrid Acquisition Pace in September

Blackstone Real Estate Income Trust, a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), continued to expand its multi-billion portfolio in September with the addition of three properties totaling $352 million.

Blackstone REIT purchased the Fairfield Industrial Portfolio, a 578,000-square-foot portfolio located in Fairfield, New Jersey, for $74 million. The property is 100 percent occupied with rents 10 percent below comparable properties. The company noted that since 2015, industrial market vacancy in Northern New Jersey has declined 250 bps to 5.3 percent and market rents have increased 9 percent per year.

The company also purchased the Gilbert Multifamily property, comprised of two Class A multifamily properties located the Phoenix suburb of Gilbert, Arizona, for $145 million. While the property names were not disclosed, the company noted that they are located within close proximity to the Price Corridor, the main employment hub of Southeast Phoenix, and adjacent to the SanTan Village, a 1 million-square-foot retail center. The properties total 748 units and are 93 percent occupied. Blackstone REIT holds a 90 percent ownership stake in the properties, however, the owner of the remaining 10 percent was not disclosed.

Domain & GreenVue Multifamily, comprised of two Class A multifamily properties located in Dallas, Texas, was purchased for $133 million. The properties, which total 803 units, are located within close proximity to major employment centers, including the CityLine mixed-use development, the University of Texas – Dallas, and the Presbyterian Hospital of Dallas. The 803-unit portfolio is 86 percent occupied.

In other Blackstone REIT news, the company recently updated its monthly net asset value for its four share classes.

Blackstone Real Estate Income Trust is a $4 billion offering that invests in commercial real estate in the United States. The company is headquartered in New York City and externally managed by BX REIT Advisors., a subsidiary of Blackstone. Blackstone currently manages various private investment funds and one publicly-traded REIT. The REIT’s $2.2 billion portfolio consists of 17 properties, and as of September 20th, the company had raised nearly $1.3 billion in investor equity.

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Carter Validus Mission Critical REIT II Buys Washington Healthcare Property

Carter Validus Mission Critical REIT II Inc., a publicly registered, non-traded real estate investment trust has purchased a multi-tenant medical office building in Silverdale, Washington for $9.6 million.

The Silverdale Healthcare Facility is a two-story, 26,000-square-foot property built in 2005 and triple-net leased to five tenants with an approximate weighted average remaining lease term of nearly 10 years. The facility provides outpatient surgical care across multiple specialties including general surgery, orthopedics, ocular and facial plastic surgery, and ophthalmology.

Two anchor tenants, Surgery Center of Silverdale LLC and Retina Center Northwest PLLC, account for approximately 67 percent of the building’s occupied square feet.

Surgery Center of Silverdale LLC, specializes in general surgery, orthopedics, podiatry, ocular & facial plastic surgery, pain management, and ophthalmology (glaucoma, retina and pediatric sub-specialties). Retina Center Northwest PLLC specializes in retinal detachment repair, general eye surgery, macular repair, and vitreoretinal surgery.

After the REIT purchased the facility, the fifth tenant, Seattle Children’s Hospital entered into a lease agreement for the remaining space at the property. The building is now fully occupied and 100 percent leased.

“We are pleased to add this investment to our portfolio and expand our presence to the Northwest United States,” said John Carter, chief executive officer of CV Mission Critical REIT II. “We believe the Silverdale Healthcare Facility’s location benefits from its proximity to significant referral sources, a stable economy, favorable demographics, and limited competition in the marketplace,”

Carter Validus Mission Critical REIT II, which invests in net leased data center and healthcare assets, went effective in May 2014 and has raised more than $1 billion in investor equity since inception. The REIT’s portfolio is comprised of 62 properties (20 data center and 42 healthcare properties) that were purchased for approximately $1.4 billion. The company’s offering is scheduled to close on November 24, 2017.

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Capital Guardian Joins Kovack Securities as Super OSJ

 

Capital Guardian LLC, a Miami-based independent broker-dealer and wealth management firm, has joined Kovack Securities Inc., an independent broker-dealer based in Fort Lauderdale.

Capital Guardian, which has 35 financial advisors, dissolved its broker-dealer platform and is now an independent branch, or Super-OSJ (office of supervisory jurisdiction), of Kovack Securities for all future brokerage activities.  Including Capital Guardian’s brokerage assets, Kovack Securities will support nearly $10 billion in total advisory and brokerage client assets going forward.

“In this era of surging industry consolidation, our strategic alliance with Capital Guardian underscores the value proposition Kovack Securities offers to firms that seek to operate scalably, while enjoying the benefits of ownership stability and the boutique service culture that only a well-resourced, family-owned firm with a national footprint can deliver,” said Brian Kovack, president and co-founder of Kovack Securities.

Capital Guardian’s advisors will continue to conduct all fee-based advisory services and financial planning through Capital Guardian Wealth Management LLC, the firm’s independent registered investment advisor, which will remain under its current ownership structure and brand.

In other Kovack news, the broker-dealer recently completed an asset purchase agreement with TKG Financial, an independent broker-dealer and financial advisory firm based in Santa Barbara, California, under which TKG became a super-OSJ of Kovack Securities.

Kovack Securities operates in tandem with its affiliated RIA platform, Kovack Advisors. Founded in 1997, the firm supports approximately 400 affiliated independent financial advisors across the country.

Capital Guardian Wealth Management provides investment opportunities from various domestic and international money management firms, mutual fund companies, as well as asset categories, including managed futures, non-registered real estate investment trusts, hedge funds, private equity, and other alternative investments.

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