March 2020 Nontraded REIT Capital Raise Down, But Quarterly Y-O-Y Results Strong
April 15, 2020 | James Sprow | Blue Vault
Blue Vault received March sales totals for 17 effective nontraded REIT program offerings as of April 14. Sales reported by those 17 NTRs totaled $287.1 million compared to $507.9 million for February, a decrease of $220.8 million, or 43.5%. One of those REITs, Griffin Capital Essential Asset REIT, closed its offering and had no sales in March after a February sales total of $6.2 million. Quarterly sales totals for the same sample of 17 nontraded REITs in Q1 2020 summed to $1.212 billion, compared to just $465.2 million for Q1 2019. That 160% increase for the same sample of 17 NTRs was largely attributable to the $534.4 million increase in sales by Black Creek Industrial REIT IV, which probably benefitted from reinvestment of proceeds from the Industrial Property Trust full-cycle event in January 2020. The sale by Industrial Property Trust of most of its assets to Prologis resulted in a special distribution to shareholders of $12.54 per share, much of which was apparently subsequently invested in Black Creek Industrial REIT IV. For example, Q4 2019 capital raise by that REIT totaled just $73.1 million, compared to $623.3 million for Q1 2020.
The $220.8 million decrease in sales by the 17 NTRs in March was significantly attributable to the $164.0 million decrease in capital raised by Black Creek Industrial REIT IV, as reinvestments of the full-cycle proceeds from Industrial Property Trust likely had decreased from the January and February totals.
Among the nontraded REIT offerings that had increases in capital raise between February and March, Cantor Fitzgerald’s two offerings both saw improvement. Rodin Income Trust, Inc. had an increase of 183%, from $598,495 in February to $1,696,245 in March. Rodin Global Property Trust saw an increase of 88% from $2.919 million in February to $5.492 million in March. CIM Income NAV saw sales increase 11.6%, and Hartman vREIT XXI had a 19% increase. Jones Lange LaSalle’s Income Property Trust had an 8.1% increase month-to-month, from $60.4 million in February to $65.3 million in March. All other REITs in the 17-REIT sample experienced decreases in sales.
The largest increase in sales from Q4 2019 to Q1 2020 was achieved by Black Creek Industrial REIT IV, at 752%, attributable in no small part to the reinvestment of proceeds from the Industrial Property Trust full-cycle liquidity event in January. Both Cantor Fitzgerald offerings saw significant increases in their Q1 2020 sales, as did InPoint Commercial Real Estate Income and Procaccianti Hotel REIT. Twelve of the nontraded REITs in the 17-REIT sample had increases in sales quarter-to-quarter.
Year-Over-Year NTR Capital Raise Comparisons
Quarterly sales totals for Q1 2020 were up significantly compared to sales in Q1 2019. Again, Black Creek Industrial REIT IV led the way with a 601% increase from $88.9 million in Q1 2019 to $623.3 million in Q1 2020. Jones Lang LaSalle’s Income Property Trust’s sales jumped 166% Y-O-Y, from $69.5 million in Q1 2019 to over $185.2 million in Q1 2020. Procaccianti Hotel REIT raised $8.68 million in Q1 2020, up from just $3.34 million in Q1 2019, an increase of 160%. Hartman vREIT XXI had the largest decrease in capital raised from Q1 2019 to Q1 2020, dropping 85% from $8.15 million to $1.24 million.
Other NTR programs raising funds in March 2020 that have yet to report their sales to Blue Vault as of April 14 include Blackstone Real Estate Income Trust, Oaktree REIT and Starwood REIT. Based upon public filings and past reports from these REITs, the total for the nontraded REIT industry for Q1 2020 would likely exceed $5.6 billion, which would be the highest quarterly total since 2013.
Nontraded BDC Sales
Three nontraded BDCs were raising funds in March 2020 and reported those sales to Blue Vault. Owl Rock Capital Corporation raised $43.9 million, down 20.8% from $55.4 million in February. MacKenzie Realty Capital reported nontraded BDC sales in March of $2.0 million, down from $3.0 million in February. Triton/Prospect reported $0.609 million sales in March. The total capital raise for Owl Rock, MacKenzie Realty Capital and Triton/Prospect in March was $46.5 million compared to $58.4 million in February, a decrease of 20.5%. The total capital raised by the three nontraded BDCs for Q1 2020 was $171.5 million compared to $104.9 million reported by those same BDCs for Q4 2019.
Nontraded Preferred Stock Issued by Listed REITs
Just two listed REITs issued nontraded preferred stock in March and reported those sales to Blue Vault. Bluerock Residential Growth REIT issued $28.5 million of its preferred stock in March, up from $18.6 million in February, an increase of 53%. CIM Commercial Trust issued $3.59 million of its nonlisted preferred in March, up 30% from its February total of $2.76 million.
