April 2020 Nontraded REIT Capital Raise Falls Due to COVID-19
May 11, 2020 | James Sprow | Blue Vault
Blue Vault received April sales totals for 13 effective nontraded REIT program offerings as of May 11. Sales reported by those 13 NTRs totaled $92.8 million compared to $276.5 million for March, a decrease of $183.7 million, or 66.4%. Three nontraded REITs suspended their offerings and did not report sales for April (InPoint Commercial Real Estate Income, Moody National REIT II, and Procaccianti Hotel REIT). The three REITs that suspended their offerings had a total of $10.1 million in sales in March.
As mentioned in the March sales article, much of the YOY increase in sales can be attributed to Black Creek Industrial REIT IV’s increase from $117.9 million in 2019 to $664.9 million in the comparable 2020 period. Black Creek Industrial REIT IV 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 $73.1 million, compared to $623.3 million for Q1 2020.
Only Nuveen Global Cities REIT among the 12 reporting REITs that were raising capital in April had an increase in sales, from $2.74 million in March to $4.87 million in April, a gain of 77.6%. All of the other reporting NTRs had significant decreases in capital raise in April. The steepest drop was for CIM Income NAV, down over 97%, followed by Rodin Income Trust (-83%), Jones Lang LaSalle Income Property Trust (-79%), and FS Credit Real Estate Income Trust (-78%).
Year-Over-Year NTR Capital Raise Comparisons
The good news in the capital raise comparisons comes in the YOY results for the first four months of 2020 compared to 2019. As mentioned, Black Creek Industrial REIT IV saw a YOY increase of 464%, Strategic Storage Trust IV had an increase of 990%, and Nuveen Global Cities REIT had an increase of 685%.
Year-over-year comparisons for the same four-month periods in 2020 vs. 2019 can be made for 13 NTRs that had sales in both the first four months of 2019 and 2020, excluding FS Credit Real Estate Income Trust and InPoint Commercial Real Estate Income which did not have sales in the first four months of 2019. That YOY comparison shows a 105% increase in sales on a same-store basis, despite the steep drop off in April 2020 due to the COVID-19 disruption in capital raise activity.
Nontraded BDC Sales
Three nontraded BDCs were raising funds in April 2020 and reported those sales to Blue Vault. Owl Rock Capital Corporation raised $19.37 million, down 56% from $43.87 million in March. MacKenzie Realty Capital reported nontraded BDC sales in April of $0.32 million, down 84% from $1.98 million in March. Triton/Prospect reported $0.042 million sales in April, down from $0.61 million in March. The total capital raise for Owl Rock, MacKenzie Realty Capital and Triton/Prospect in April was $19.74 million compared to $46.46 million in March, a decrease of 58%. The total capital raised reported by the three nontraded BDCs for YTD 2020 was $191.2 million compared to $203.6 million reported by those same BDCs for the same four months in 2019.
Nontraded Preferred Stock Issued by Listed REITs
Three listed REITs reported nontraded preferred stock issuances in April and reported those sales to Blue Vault. Bluerock Residential Growth REIT issued $13.2 million of its preferred stock in April, down from $28.5 million in March, a decrease of 54%. CIM Commercial Trust issued $1.59 million of its nonlisted preferred in April, down 56% from its March total of $3.59 million. Preferred Apartment Communities issued $12.21 million in PAC Preferred A1 and M1 shares. Through the first four months of 2020, Bluerock Residential Growth REIT has issued $70.6 million in nonlisted preferred stock compared to $104.5 million for the same four months in 2019. The year-to-date total for CIM Commercial Trust was $13.5 million for the first four months of 2019 compared to $10.9 million through April 2020.
