December Nontraded REIT, BDC Sales Down
January 15, 2019 | James Sprow | Blue Vault
Nontraded REITs booked capital raise of $405.7 million in December*, down 2.7% from the $417.0 million in November. Blackstone REIT saw capital raise increase in December by 8%, but other nontraded REIT offerings saw their combined capital raise decrease by 16%, from $180.6 million to $150.8 million, resulting in the month-to-month drop for the industry. With the Blackstone REIT December sales of $254.8 million, up from sales in November of $236.4 million, the 2.7% decrease in capital raise month-to-month among NTRs was due to several other REIT programs significantly decreasing their capital raise. After Blackstone REIT with 63% of the month’s sales, the leading REIT program in capital raise in December was Griffin-American Healthcare REIT IV, Inc. with sales of $32.6 million, up 14% from November’s $28.6 million. Black Creek Industrial REIT IV was next with sales of $31.9 million, down 36% from November. Another Black Creek REIT program, Black Creek Diversified Property Fund raised $16.2 million, down 7% from its November total of $17.3 million. The Hines Global Income Trust total for December was $13.8 million, up from $11.2 million in November.
Among the sponsors of nontraded REIT offerings, Blackstone was first in capital raised with $254.8 million, for 63% of the total NTR sales. Black Creek Group, with two open programs, was next with $48.0 million raised and a 12% share, followed by Griffin Capital Company with two programs totaling $32.6 million and an 8% share. CIM Group (formerly Cole Capital) was next with $12.4 million, followed by Jones Lang LaSalle with $12.0 million.
The latest new nontraded REIT reporting sales in December, Procaccianti Hotel REIT Inc., increased its sales from November to $0.805 million from $0.534 million in November.
Among those REITs with significant increases in capital raised between November and December, the largest percentage increase was achieved by Hartman vREIT, from $0.9 million in November to $3.5 million in December, an increase of 280%. Procaccianti Hotel REIT increased sales 51% and Moody National REIT II sales increased 39%.
December 2018 NTR sales at $405.7 million were 50% above the year-earlier December 2017 sales of $271.2 million, continuing the increasing trend for the NTR sector. The Q4 2018 total was $1,237.8 million, up 5.6% from the Q3 2018 total of $1,172.5 million, and up 40.5% from the $880.8 million for Q4 2017.
The total NTR capital raised in 2018 was estimated at $4.49 billion, up from $4.29 billion for 2017. The entrance of Blackstone into the nontraded REIT space, breaking escrow with Blackstone Real Estate Income Trust on January 1, 2017, greatly impacted the capital raise totals, with a market share above 60%.
Nontraded BDC Sales Fall in December
Nontraded BDC sales decreased from $43.8 million in November to $42.0 million in December, a decrease of 4%, with only three nontraded BDC programs raising funds in December compared to six in April and seven in February. Owl Rock Capital Advisors again led nontraded BDC sponsors with sales of $38.6 million by its Owl Rock Capital Corporation II program, 67.5% of all nontraded BDC sales in December, down 2% from its $39.4 million sales in November. CION Investment Corporation reported sales of $1.9 million in December, 3.3% of nontraded BDC sales for the month, and down from $3.0 million in November. MacKenzie Realty Capital was a distant third with $1.45 million in sales for a 2.5% share of all December BDC sales, down from its November sales of $1.48 million.
*Blue Vault did not receive sales data for November or December from the following: Phillips Edison Grocery Center REIT III, Nuveen Global Cities REIT, Starwood REIT, Oaktree REIT, and FS Credit Real Estate Income Trust.
The time (at Blue Vault's 2nd Annual Broker Dealer Educational Summit) proved extremely informative.