Monthly Reported NTR Sales Slow in June, Still Up 112% Over June 2018

July 17, 2019 | James Sprow | Blue Vault

Reporting nontraded REITs booked capital raise of $751.4 million in June, down 9.8% from the $832.8 million total for May but up 32% from the $570.7 million monthly average for the same NTRs in Q1 2019. Blackstone REIT saw capital raise decrease in June by 14%, but the total for all other reporting effective nontraded REIT offerings showed an increase of 5.5%, from $181.3 million to $191.2 million, as Blackstone REIT’s share of total reported NTR sales decreased slightly from 78.2% in May to 74.6% in June.

Starwood REIT did not respond to requests for sales figures for the quarter ended June 30, 2019, or for the first quarter of 2019. Based on SEC filings, Blue Vault estimates that Starwood REIT had June sales of approximately $62 million, and sales for Q2 2019 of approximately $135 million. Blue Vault had previously estimated that Starwood REIT had sales of $165 million in Q4 2018. Based on shares outstanding, it’s estimated that Starwood is averaging $45 million in sales per month and has raised over $360 million in its offering as of June 30. Also, based on shares outstanding as of June 30, it’s estimated that FS Credit Real Estate Income Trust was raising common equity at a pace of roughly $6.8 million per month in Q2 2019. Based upon SEC filings, Blue Vault estimates that Nuveen Global Cities REIT raised approximately $2.9 million in June. Phillips Edison Grocery Center REIT III did not report sales to Blue Vault for May and the REIT suspended its public offering effective June 14, 2019. Oaktree REIT has yet to report capital raise in its open offering. While total sales for the reporting REITs, without these five effective REITs, totaled $751.4 million, adding reasonable estimates for each could raise the industry’s June total above $820 million.

With the Blackstone REIT June sales of $560.2 million, down 14% from sales in May of $651.5 million, the 9.8% decrease in total capital raise month-to-month among reporting NTRs was due mainly to that REIT’s drop. Hines Global Income Trust increased its sales by 12% to $42.3 million, and Jones Lang Lasalle’s Income Property Trust saw sales rise 30% to $37.9 million. Cantor Fitzgerald’s two nontraded REITs, Rodin Global Property Trust and Rodin Income Trust, had sales increases of 17% and 12%, respectively, to a total of $31.7 million for that sponsor in June.

In terms of ranking, after Blackstone REIT, the next NTR with $42.5 million and a 5.7% share was Hines Global Income Trust, followed by Jones Lang LaSalle Income Property Trust with $37.9 million for a 5.0% share. Rodin Global Property Trust was fourth, with $26.9 million and a 3.6% share.

For the reporting sponsors of nontraded REIT offerings in June, Blackstone was first in capital raised with $560.2 million and a 74.6% share. Hines Securities ranked second with $42.5 million and a 5.7% share of all reported NTR sales, followed by Jones Lang LaSalle with $37.9 million and a 5.0% share. Black Creek Group, with two open programs, was next with $37.7 million for a 5.0% share.

Nontraded BDC Sales Fell 21% in June

Nontraded BDC sales fell 21% from $47.8 million in May to $37.8 million in June, with only three nontraded BDC programs raising funds in June 2019 compared to six in April 2018 and seven in February 2018. Owl Rock Capital Advisors again led nontraded BDC sponsors with sales of $36.4 million by its Owl Rock Capital Corporation II program, 96% of nontraded BDC sales in June, down 21%from its $45.9 million sales in May. MacKenzie Realty Capital was one of two other BDC programs raising capital with $1.37 million in sales for a 3.6% share in June, down 23% from its May sales of $1.77 million. TP Flexible Income Fund, formerly Triton Pacific Investment Corporation, raised just $0.028 million in June.

Nontraded Preferred Sales by Listed REITs

Blue Vault receives sales reports from three listed REITs that issue nontraded preferred shares. Nontraded preferred sales by these REITs totaled $29.2 million in June 2019, up from the $22.3 million total in May. Bluerock Residential Growth had sales of $19.04 million for June, increasing 52% from the $12.56 total for May. Gladstone Land Corp. reported nontraded preferred sales of $6.46 million for June, up 3% from the $6.27 million in May. CIM Commercial Trust had nontraded preferred sales of $3.70 million in June, up 7% from May sales of $3.46.

At least one additional listed REIT issues nontraded preferred stock. Preferred Apartment Communities, Inc. does not report monthly preferred share sales to Blue Vault but SEC filings for Q1 2019 show proceeds of $128.7 million, before offering costs, from sales of units consisting of one share of Series A Redeemable Preferred Stock and one warrant to purchase up to 20 shares of Common. If the pace of preferred sales by this listed REIT continued in June 2019, the total for four listed REITs issuing nontraded preferred would exceed $70 million for the month.

Sources:  Reporting NTRs and BDCs, SEC and Blue Vault