Real Estate Private Placement Offerings Under New Regulation A+ and Regulation D, Rule 506

Description

Under newly released Regulation A+, offerors are now able to raise up to $50 million in a 12-month period, up from the previously allotted $5 million. The real estate market is particularly poised to take advantage of the new crowdfunding opportunities for project development funding and acquisitions.

There are some unique issues for real estate offerings that counsel must consider in structuring the offering. Asset-backed securities are not eligible securities, although there is an exception that sponsors may utilize. It is not entirely clear whether Regulation A+ permits an offering of mezzanine debt. An alternative structure for sponsors to consider is a Regulation A+ offering with preferred equity in an LLC.

The SEC’s significant changes to the private placement provisions in Regulation D have transformed the real estate investment fund market allowing sponsors to advertise private securities offerings to accredited investors via the Internet and mainstream media. Counsel must understand the “bad actor” provisions as well as the broker-dealer implications.

Listen as our experienced panel discusses the SEC’s new Regulation A+ rules for crowdfunding and the opportunities and pitfalls for real estate sponsors and developers. The panel will also discuss developments in Regulation D solicitations, the “bad actor” provisions under Rule 506 and the impact of the general solicitation rules on the real estate investment fund market.