The IMN’s 11th Annual Non-Traded REIT Symposium kicked off in New York City yesterday with an opening featured presentation from Nicholas S. Schorsch, Chairman and CEO of American Realty Capital. The positively optimistic Schorsch provided several interesting stats and thoughts that suggest there is more work to be done in the Direct Investment Industry.
For starters, only 25% of the Series 7 registered representatives (reps) have placed a client in a non-traded REIT, BDC or other limited partnership, according to Schorsch. Suggesting that sponsors and the industry would benefit from further educating reps and their respective broker-dealers.
Media publicity was also a mentioned concern by the REIT czar and several other big name executives during the IMN’s Symposium. Schorsch suggested that there is “no recovery from a bad product” for any sponsor and potentially the industry as a whole, in the short term. He says that the “biggest risk [to the industry] is our own products.”
Schorsch says that sponsors need to listen to investors and provide what they want. It’s not about liquidity events, but rather, profitable liquidity.
Bad actions or unprofitable liquidity events are what make it into the media, over and over again, causing harm to the industry.
The future is bright, according to Schorsch. He estimates the industry will surpass last year’s record capital raise of over $24 billion and raise between $30 and $35 billion in 2014.
He sees opportunities coming from many of the new NAV products that allow access to the Registered Investment Advisor (RIA) channel.
Lastly, Schorsch called FINRA’s 14-06 the “single greatest thing to happen to this industry in decades.” He cited the improved transparency and benefits to investors as reasons along with the industry’s need to innovate as a means of adapting to the potential new rule.