Optimism among the more than 1,000 attendees at the recently concluded Alternative & Direct Investment Securities Association Annual Conference in Las Vegas was pervasive, as equity flows into the alternative investment space continue to exceed expectations.
Two of the industry’s benchmark investment types, non-traded real estate investment trusts and 1031 exchanges, appear to be experiencing significant growth, according to speakers at the annual event.
Taylor Garrett, managing director of Mountain Dell Consulting, revealed that with interest in Section 1031 exchanges remaining high in the current economy, year-over-year capital raise among Section 1031 exchanges is expected to grow 31.3 percent to a total of approximately $3.25 billion in 2019, primarily in offerings utilizing the popular Delaware statutory trust structure.
Garret attributed the significant growth to a number of full-cycle events that have provided “significant positive returns to investors” this year. He also said interest in 1031 exchange offerings continues to grow among wealth advisors in both the broker-dealer and registered investment advisor channels.
Top sponsors among thus far in 2019 included Inland Private Capital Corporation, Passco Companies, Exchange Right Real Estate, Capital Square, Black Creek Group, Cantor Fitzgerald and BlueRock Real Estate.
On the non-traded REIT front, Kevin Gannon, chairman and chief executive officer of investment bank Robert A. Stanger & Co., reported that fundraising continues to increase dramatically and that the industry should raise approximately $10 billion in 2019, more than double the $4.6 billion raised in 2018.
“Non-traded REITs are bouncing back, with a number of institutional giants following Blackstone into the space,” said Gannon. “We’re seeing a lot of wire houses begin to distribute non-traded REITs, opening an entirely new channel for these reemerging products.”
Equity raise among non-traded REIT sponsors in 2019 thus far has been dominated by Blackstone Group, which has raised more than $5.5 billion through September. Other significant fund raisers include Starwood Group, Black Creek Group, Hines and LaSalle Investment management, with between $285 million and $514 million raised through September.