FactRight, a provider of due diligence and risk management for alternative investments including non-traded direct investments, recently announced a new partnership with Covius, a full-service provider of real estate advisory and technology services.
FINRA Notice to Members 10-22 says that broker-dealers must use “reasonable investigation practices” when offering private placements to clients. The regulatory agency suggests that an inspection of an issuer or sponsor’s assets and facilities is a reasonable due diligence practice.
By partnering with Covius, FactRight has access to over 3,300 inspectors nationwide to perform independent property inspections of assets owned by real estate related investment programs, thus, providing broker-dealers with an additional level of independent review.
Large commercial banks and institutions rely on Covius for over 150,000 site inspections per year and now the company will use their expertise to help broker dealers assess and verify:
- The sponsor’s assertions about the property
- Property condition
- Visibility and accessibility
- Neighborhood trends
- Broker interviews to discover current local market conditions
- Rental rates and lease terms
- Capitalization rates and sales comparables
FactRight’s due diligence reports will include the Covius’ report(s) and pictures from site inspections.