The sale of public non-traded real estate investment trusts dwindled in 2015, according to the most recent Stanger Market Pulse. Uncertainty stemming from FINRA’s regulatory notice 15-02, which takes effect in April, coupled with the proposed Department of Labor fiduciary rule, may have had a negative impact on equity raising throughout the industry. The implosion of AR Capital and sister-company Realty Capital Securities (NYSE: RCAP) had the most direct impact on industry sales.
Equity REIT sales in 2015 declined significantly compared to 2014, topping out at just shy of $9 billion, a 40 percent decrease from the $15 billion raised the year before.
Mortgage loan REITs sales fared much better percentage-wise, raising $1.03 billion in 2015, compared to the $647.1 million raised in 2014 – a 59.7 percent increase.
The total equity raised for both equity and mortgage loan non-traded REITs for 2015 was just under $10 billion, a 36.2 percent decrease from the $15.6 billion raised in 2014.
Despite the controversy that swirled around it and AR Capital, the top selling broker-dealer in 2015 was Realty Capital Securities. The now defunct firm raised close to $3.4 billion and took the top spot by a landslide with 24 percent of the market share prior to closing its doors in December as a result of multiple scandals. Despite this, however, financial advisors still made the embattled brokerage firm the largest single distributor of non-traded REITs during December with $69 million in equity raise for the month, or 5.7 percent of the market share.
NorthStar Securities raised $1.3 billion in 2015, or 9.2 percent of the market share. CNL Securities and Griffin Capital Securities were neck-in-neck for the year, raising $1.2 billion a piece and each taking home 8.7 percent of the market share.
Griffin American Healthcare REIT III surpassed all other non-traded REITs in terms of sales for 2015. The program, which closed its offering mid-way through February, raised an astounding $933 million in just six weeks to claim the crown as the top equity raising non-traded REIT of 2015. The flood of equity followed the merger in December 2014 of Griffin-American Healthcare REIT II with NorthStar Realty Finance (NYSE: NRF) for $4 billion.
Industrial Property Trust and NorthStar Healthcare Income claimed the silver and bronze for the year, raising $802.6 million and $775.1 million, respectively.