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Check this out for a very good, concise overview of the real estate investment market by Stuart Eisenberg, head of BDO’s real estate practice.

Per this article, private equity is flowing heavily into real estate funds again.  Investors missed the sky-high returns – we’re talking 50%, sometimes over 100%, IRRs – they would have harvested if they bought anywhere near the bottom in 2009 and 2010, but it’s a meaningful statement about the health of real estate for the next couple of years.  And good for the economy.  Just keep your eye open for the ridiculous cap rates of 2005 and 2006, and short, short, short!   

The crowdfunding allowed by the JOBS Act of 2012 is getting a lot of attention, but we have yet to hear from the SEC and FINRA on how they are going to regulate it.  The details of that will spell doom or boom for crowdfunding.  In any event, the dollar limit ($1 million in any 12-month period) makes it kind of uninteresting from an investment banking standpoint.

As investment bankers, we like the element of the Act that waives the prohibition against general solicitations for Reg D private placements, provided the deal is ultimately funded with accredited investors.

This article on real estate and crowdfunding provokes ideas about how interests in capital assets might be bought, sold, and traded among accredited investors in the private markets:   http://www.businessweek.com/articles/2013-01-24/crowdfunding-for-real-estate-buy-a-slice-of-a-skyscraper.   

More on crowdfunding as regulatory issues are clarified.


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