ARCTRUST Hires Two Vice Presidents of Institutional Equity Capital

ARCTRUST Properties Inc., a sponsor of non-traded alternative investment offerings, has hired two vice presidents of institutional equity capital, Daniel Gormont, Sr. and Chris Wadelin, who will focus on raising new equity investment capital within the registered investment advisor, family office, and institutional marketplace across the United States.

With more than 20 years of investment industry experience, Gormont’s career has spanned raising capital in the private equity and alternative investment space, as well providing asset management services to bank trust departments, independent trust companies and wealth management family offices.

According to his LinkedIn page, Gormont previously served as vice president of the RIA channel for the eastern markets at Triton Pacific Securities. Other positions include vice president of sales at Fidelity and director of marketing and distribution at Kellner Capital. Notably, he served a tour of duty with the United States Secret Service in 2006, providing protection for former President George W. Bush.

Gormont holds a bachelor’s degree in business administration from Pennsylvania State University and FINRA Series 24, 7 and 63 securities licenses.

Wadelin’s experience in the financial services industry began on the wealth management side, and he spent most of the last decade on the sponsor side, focused on commercial real estate, and private equity alternative investments. During his tenure, he has helped raise more than $1.7 billion of investor capital, the company said.

According to his LinkedIn page, Wadelin previously served as a regional vice president at Simplicity Financial Distributors, formerly M3 Financial, senior vice president of capital markets at Access Capital Group, and senior vice president at Moody National Companies.

He holds a bachelor’s degree in physiology from Northern Illinois University and FINRA Series 7 and 66 securities licenses.

“With combined investment management experience of over 35 years, coupled with a heavy emphasis on real estate, private equity and alternative investments, we’re pleased to welcome Mr. Gormont, Sr. and Mr. Wadelin to the ARC- TRUST team,” said James Steuterman, president of ARCTRUST.

ARCTRUST Properties Inc. sponsors several Regulation D private placement offerings and real estate investment trusts, including ARCTRUST Inc., ARCTRUST III Inc., and Capitol Opportunity Zone LP. Over the past 35 years, ARCTRUST and its affiliates have been responsible for more than 500 transactions valued at more than $3.5 billion, the company said.

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Interval Funds Continue to Attract Investors, But Distribution Coverage Shrinks

Real estate interval funds have continued to experience strong growth in their equity capital raising efforts, according to Summit Investment Research’s Real Estate Interval Fund Market Snapshot. The snapshot is based on the most recent financial reports filed as of September 30th, 2016.

Interval funds have increased their capital raise by $1 billion in the last six months and $2 billion in the last year. During the six months ended September 30th, interval funds raised a total of approximately $3.2 billion, compared to nearly $2.2 billion during the six months ended March 31, 2016. During the same period last year, interval funds raised a total of $1.2 billion.

Three interval funds, Griffin Institutional Access Real Estate Fund, Versus Capital Multi-Manager Real Estate, and Total Income + Real Estate Fund, dominate the equity capital raise for real estate interval funds with a 93 percent market share for the twelve months ended September 30th.

Griffin Institutional Access, the largest real estate interval fund, topped the list with total net assets of approximately $1.2 billion. Versus Capital Multi-Manager fund came in a close second with $1 billion in assets, followed by Bluerock’s Total Income+ with $491.4 million in total assets. Multi-Strategy Growth and Income Fund, Vertical Capital Income Fund, and Resource Real Estate Diversified Income Fund posted total net assets of $491.4 million, $196.5 million, and $178.6 million, respectively.

Real estate interval funds reported average annual total returns of 7.9 percent for no load class A shares. According to Summit, total returns vary by real estate fund from a low of 1.2 percent and high of 11.1 percent for no load class A shares. For class A share with a load, total returns averaged just 1.7 percent, while no load class I shares posted an 8.3 percent average return.

Average distribution rates have inched up steadily over the last two years. Interval funds posted 5.1 percent average distribution rates, as of September 30th, a 4 percent increase from last year’s average of 4.9 percent. During the same reporting period in 2014, interval funds reported distribution rates of 4.7 percent.

Distribution coverage, an ongoing issue with interval funds, has been steadily declining since fiscal year end 2014. For the current reporting periods, real estate interval funds had an average distribution coverage of just 29 percent, nearly half of the 56 percent distribution coverage in 2015. In 2014, distribution coverage averaged 64 percent.

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Individual Investor Makes Public Bid for Shares of 3 Non-Traded REITs

REITCO LLC (REITCO) announced today its interest to purchase shares of non-traded REITs Inland American Real Estate Trust (Inland American), Corporate Property Associates 16 (CPA 16) and TIER REIT, Inc. (Tier).

Inland American has made it known that liquidity options are being considered and could come in a series of liquidity events rather than one complete transaction.

In the release, REITCO commented “Inland American has stated they intend to consider liquidation events but have not stated anything definitively and it appears that final liquidity is still several years away.” Because of this, they are now offering “85% of the sponsor’s announced net asset value of $6.93.”

Inland American had not replied to an inquiry for comments at the time this article was published.

CPA 16, advised by W.P.Carey Inc. (W.P. Carey), has liquidity plans of its own. Its board of directors along with that of W.P. Carey’s, has approved a merger in which CPA 16 stockholders will receive $11.25 per share in the form of W.P. Carey common stock (NYSE: WPC). A communication detailing the timeline of events and anticipated closing of January 31, 2014 was filed today with the SEC. Financial Advisors with clients invested in CPA 16 should have received this communication along with a list of each client eligible to vote on the merger, today.

REITCO’s offer to CPA 16 shareholders is “very close to the original offering price of $10.00.” When asked about the offer, Larry Cohen of REITCO responded in an email “CPA 16 is planning a liquidation event but it is subject to a vote and the pricing is subject to the market variations of WPC stock.”

A spokesperson for CPA 16 declined to comment on the REITCO offer.

TIER REIT, now an internally managed organization, was formerly Behringer Harvard REIT I, Inc. REITCO’s offer is for $1.80 per share.

A spokesperson for TIER REIT declined to comment on the REITCO offer.

Based out of Scottsdale, Arizona, REITCO is a one owner enterprise, owned and operated by Lawrence (Larry) Cohen. Larry describes REITCO as himself, an individual investor buying interests in non-traded REITs and other limited partnerships from investors seeking liquidity.

To see the original press release, click here.


Former SEC Examiner/GPB Executive Pleads Guilty to Misdemeanor Theft of Government Property

Michael Cohn, a former Securities and Exchange Commission examiner who was hired as managing director and chief compliance officer at GPB Capital Holdings in October 2018, pled guilty on Tuesday to misdemeanor theft of government property.

Federal prosecutors alleged that during discussions with GPB about obtaining a job there, Cohn told GPB senior management that he had inside information about an SEC investigation into the company, which they claim he disclosed. Cohn, who will be sentenced in January 2021, denied the allegations.

Last year, Cohn was charged with obstruction of justice, unauthorized computer access and unauthorized disclosure of confidential information, all felonies. However, the government dropped the felony charges which carried up to 20 years in prison, in return for a misdemeanor plea. He now faces between six months to one year in prison.

Cohn previously worked as a securities compliance examiner and industry specialist in the SEC’s enforcement division, where he assisted investigations into violations of securities laws.

According to a report published by Newsday, Cohn’s attorney, Scott Resnik, said that his client used the information as background to prepare for a job interview at GPB, not for felonious purposes.

“…Cohn was with GPB for less than a year and GPB had no involvement with or knowledge of his wrongdoing,” a company spokesperson told the publication. “GPB terminated Cohn immediately upon learning of the situation.” 

GPB focuses on acquiring private companies in various industries, including the automotive retail and waste management sectors, and raised more than $1.8 billion in investor equity through various private placement offerings.

GPB halted raising new money in August 2018 and suspended redemptions “to focus on accounting and financial reporting” on two of its private offerings, the GPB Automotive Portfolio and the GPB Holdings II.

In March 2019, representatives from the Federal Bureau of Investigation and the New York City Business Integrity Commission made an unannounced “visit” to the company’s headquarters in Manhattan. At the time, GPB said that the agencies obtained a search warrant to collect materials from the premises and believed that the visit was a continuation of previous ongoing inquiries.

Specifically, GPB disclosed that in the summer of 2018 it received a subpoena from the U.S. Attorney’s Office – Eastern District of New York that requested documents related to a waste management fund in connection with the NYC Business Integrity Commission’s investigation.

Additionally, the firm has received subpoenas from the SEC and the New Jersey Bureau of Securities and said that it is cooperating with the various agencies and their document requests.

GPB has missed multiple deadlines for its audited financial reports, most recently due to the resignation of the firm’s auditor and audit committee in November 2019.

And more recently, in May 2020, the Massachusetts Securities Division charged GPB with allegedly violating state securities laws, after an investigation found that the company purportedly issued marketing materials to more than 180 Massachusetts investors which contained material misstatements and omissions.

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FINRA Alerts Firms to Fraudulent Phishing Email Campaign

The Financial Industry Regulatory Authority has warned member firms of an ongoing phishing campaign that involves fraudulent emails purporting to be from “FINRA Membership” and using the email address “supports@finra-online.com.”

The email asks the recipient to respond to an issue of “regulatory non-compliance for which your immediate response is required,” and then asks the recipient to click on a link or document.

FINRA recommends that anyone who clicked on any link or image in the email immediately notify the appropriate individuals in their firm of the incident.

The domain of “finra-online.com” is not connected to FINRA, and firms should delete all emails originating from this domain name, the regulator said. FINRA reminds firms to verify the legitimacy of any suspicious email prior to responding to it, opening any attachments or clicking on any embedded links.

FINRA has requested that the Internet domain registrar suspend services for “finra-online.com”.

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Industrial Property Trust to Buy California Portfolio for $189 Million

Industrial Property Trust, a publicly registered non-traded real estate investment trust, signed four purchase agreements with a group of sellers to acquire 15 industrial buildings for approximately $189 million, exclusive of closing costs. The group of sellers includes LBA/MET Partners I-Company II LLC, LBA/MET Partners I-Company III LLC, LBA/MET Partners I-Company V LLC and LBA/MET Partners I-Company IX LLC.

The Golden State Industrial Portfolio totals approximately 1.4 million square feet on 81.5 acres. The 15 properties are located in the San Francisco Bay Area, Southern California, and Central Valley, California markets and are 100 percent occupied by 40 customers with a weighted-average remaining lease term of approximately 3.5 years.

Industrial Property Trust deposited $3.8 million into an escrow account, and expects to pay an acquisition fee to the advisor equal to 2 percent of the total purchase price. The REIT plans to fund the acquisition using proceeds from its public offering and borrowings from its corporate line of credit.

The acquisition of the Golden State Industrial Portfolio is expected to close during the fourth quarter of 2015.

As of September 30, 2015, Industrial Property Trust had acquired, either directly or through its 51 percent ownership interest in a joint venture partnership, 91 industrial buildings totaling approximately 13.2 million rentable square feet in 15 major industrial markets for an aggregate purchase price of approximately $1 billion.


Griffin Interval Fund Reports Record Performance in 2021, Surpasses $5 Billion in AUM

Griffin Institutional Access Real Estate Fund, a closed-end interval fund managed by Griffin Capital, has reportedly surpassed $5 billion in assets under management, following its “best calendar year of performance” since inception.

The company said that, in addition to the record annual performance, posting a total return of 23.71 percent (NASDAQ: GRIFX) in 2021, the fund produced its best quarter of performance since inception in the fourth quarter of 2021, and concluded the year by delivering its best month of performance since inception in December 2021.

“We are pleased with the fund’s strong performance and asset growth in 2021,” said Dr. Randy Anderson, chief executive officer of Griffin Capital Asset Management Company. “We allocated a significant amount of capital to our high conviction themes…which contributed to the fund’s returns in 2021, and consequently bolstered exposure to sectors that we believe may benefit from secular growth trends.”

Anderson noted that the “high conviction themes” include multifamily, industrial, and specialty, i.e. life science and student housing.

Since inception, the fund has reportedly generated positive returns in 28 of 30 quarters with an annualized volatility (standard deviation) of 3.54 percent as of December 31, 2021.

Griffin Institutional Access Real Estate Fund Results (Class I shares as of December 31, 2021):

  • 23.71 percent total return during 2021 (best calendar year since inception)
  • 8.73 percent total return during the fourth quarter of 2021 (best quarter since inception)
  • 3.82 percent total return during December 2021 (best month since inception)
  • 77.74 percent cumulative total return and 7.97 percent annualized total return, since inception.

Griffin Capital is a privately held alternative investment asset manager headquartered in Los Angeles, California. Founded in 1995, Griffin Capital has owned, managed, sponsored or co-sponsored investment programs encompassing more than $20 billion in assets.

The company’s alternative investments include three groups of products: non-traded real estate investment trusts (REITs), interval funds in the company’s Institutional Access fund family, and tax advantaged strategies, including Delaware statutory trusts and opportunity zone funds.

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Walton Launches Capital Markets Business Line with Two New Land Funds

Walton Global, a land asset management and global real estate investment company, has launched its U.S. capital markets business line with two new private placement funds that aim to support the “escalating need for land” by U.S. homebuilders.

The Regulation D 506 (c) funds include the U.S. Residential Growth Fund and the U.S. BILT Fund and will be offered to registered investment advisors, broker-dealers, institutional and family office investors across the country. The funds will focus on acquiring land in submarkets near growing metropolitan cities in Texas, California and Colorado, among others.

“Our new U.S. strategy is based on the continued demand for housing which is depleting homebuilders’ land inventory faster than they can build homes,” said Todd Woodhead, executive vice president of capital markets for Walton. “Homebuilders are searching for a steady flow of land into their pipelines, so they can bring new homes to the market as quickly as possible.”

“Our new funds are intended to help homebuilders with land inventory while intending to provide our investors with attractive returns and continuous cash flow. Based on projections, the real estate market isn’t anticipated to slow down anytime soon, which will fuel our funds well into the future,” added Woodhead.

The U.S. Residential Growth Fund seeks to raise $50 million and offers investors exposure to short-term land investments, partnering with public homebuilders in target markets throughout the United States. According to Walton, cash flow is projected to begin within two to three years.

The U.S. BILT Fund seeks to raise between $50 million and $100 million to invest in land assets identified by a “top U.S. homebuilder” for their nearest-term development projects, Walton said. Cash flow is projected to begin within six months.

Headquartered in Scottsdale, Arizona, Walton is a privately-owned company focused on the research, acquisition, administration, planning, and development of land. The company has 42-years of experience in the land industry and manages and administers $3.4 billion in assets on behalf of global investors located in 71 countries, builders and developers, and industry partners. Walton has more than 98,000 acres of land under ownership, management and administration in the United States and Canada.

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The Parking REIT Sells Majority Stake to Bombe Asset Management

The Parking REIT Inc., a publicly registered non-traded real estate investment trust formed by the December 2017 merger of MVP REIT and MVP REIT II, has sold a majority stake in the company to an affiliate of Bombe Asset Management LLC, a Cincinnati-based alternative asset management firm.

Bombe invested more than $125 million into The Parking REIT, comprised of $35 million in cash plus the contribution of parking assets and other property valued at more than $90 million, in exchange for operating partnership units valued at $11.75 per unit and warrants to purchase The Parking REIT common stock.

As part of the transaction, Bombe’s affiliate purchased 1.55 million shares of common stock of The Parking REIT at $11.75 per share from the REIT’s advisor and its affiliates, and CEO Michael Shustek.

The Parking REIT’s advisor also surrendered its claim to 400,000 shares of common stock due from The Parking REIT on December 31, 2021 and contributed 175,000 shares to a settlement fund.

“Proceeds from the purchase of the shares from the settlement fund will be used for the benefit of the company’s common stockholders,” The Parking REIT said. “The settlement fund was created as part of the settlement of three class action lawsuits in which The Parking REIT was named as a defendant.”

Shustek stepped down as a director and officer of The Parking REIT. Manuel Chavez will serve as The Parking REIT’s chairman and chief executive officer, and Stephanie Hogue will serve as president.

Earlier this month, the Securities and Exchange Commission charged Shustek with securities fraud, along with his investment advisory firm, Vestin Mortgage LLC. Shustek’s attorney, Manny Abascal of Latham & Watkins LLP, said that Shustek “looks forward to contesting these old and unfounded claims and clearing his name.”

The Parking REIT’s board elected Jeffrey Osher, Lorrence Kellar, Damon Jones, Danica Holley, Manuel Chavez, and Stephanie Hogue as new board members.

Osher is the founder and managing member of the hedge fund No Street Capital LLC. Kellar, formerly an executive with Kmart and Kroger, is member of the boards of Acadia Realty Trust and The Spar Group.

Jones serves as the chief communications officer at The Procter & Gamble Company, a position he has held since March 2020. Holley has served as Global Medical REIT’s chief operating officer since March 30, 2016. Shawn Nelson, a member of The Parking REIT board since 2017 and the independent committee that elected to move forward with the transaction, remains a member of board.

The company said that it plans to launch a tender offer to purchase up to 900,506 of The Parking REIT’s outstanding shares for $11.75 per share in cash.

The Parking REIT’s most recent net asset value per share was $25.10, as of May 15, 2019. In late December 2020, the REIT informed the Securities and Exchange Commission that it will further delay calculating its NAV per share, citing impacts of the global COVID-19 pandemic. Shares were originally sold for $25.00 each.

The Parking REIT invests primarily in parking lots and garages in the United States and owns a portfolio of 40 parking facilities located in 16 states. The company commenced operations in December 2015 and raised approximately $61.3 million in the initial public offering until closing in March 2017.

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Amanda Teeple Joins Evolv Capital as Managing Director

Evolv Capital Partners LLC, a developer and distributor of direct alternative investments, has hired Amanda Teeple as a managing director. In her new role, she will be responsible for securing selling agreements with independent broker-dealers and registered investment advisors for all products distributed by Evolv.

“Amanda brings to us more than 15 years of experience and knowledge of the alternative investment space, and we are thrilled to have her work with our products,” said Brannon McPherson, managing partner at Evolv. “Her leadership skills and reputation within the industry, combined with her product knowledge and ability to cultivate relationships will be an integral part of furthering our long-term strategic goals.”

Teeple joined Evolv from the Ladenburg Thalmann group of broker-dealers where she served as vice president – due diligence officer at Triad Advisors Inc. During her six-year tenure at the firm, she was responsible for evaluating alternative products available on the Triad Advisors platform. Prior to Triad, she held various positions in the alternative investment space including assistant vice president at Realty Capital Securities and manager of competitive intelligence at Wells Real Estate Funds.

Teeple received a master of business administration from Georgia State University and a bachelor of business administration in computer information systems from Mercer University. She is a member of the Investment Program Association and the Financial Services Industry, where she served as past chairperson of the Broker-Dealer Advocacy Committee and the Due Diligence Council. Teeple holds Series 7 and 63 securities licenses.

Evolv’s offerings include a Series A preferred stock and warrant offering of publicly traded REIT CIM Commercial Trust (NASDAQ: CMCT), and Hancock Park Corporate Income, a private business development company that invests in the debt of U.S. middle-market companies.

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