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Research Papers

Our experts have published extensively in peer-reviewed journals. Pre-publication versions of these papers plus other working papers are available below.

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Regulation D Offerings: Issuers, Investors, and Intermediaries

The Reg D offering market is similar to the public offering market in capital raised and has been growing rapidly over recent years. The proceeds from Reg D offerings sold between 2021 and 2023 total $6.2 trillion, 23% more than the capital raised in registered offerings over the same period and a 86% increase over the proceeds from Reg D offerings sold during 2011-2013. Reg D securities have recently been sold to more investors per offering with a less amount sold per investor, suggesting an increasing retail preference for unregistered securities. Intermediaries play an important role in reaching retail investors. Offerings sold by broker-dealers with more retail clients and offerings sponsored by investment advisers with more wealthy individual clients are purchased by more investors per offering and raise less capital per investor. Investors of unregistered offerings must be wary of intermediariy misconduct and conflicts of interest. Broker-dealers that receive more commissions and specialize in selling unregistered offerings tend to receive more customer complaints stemming from unregistered securities. Investment advisers with non-fund clients are more likely to disclose conflicts of interest in regulatory filings when they sponsor Reg D offerings, indicating that they allocate client funds in self-sponsored unregistered securities.

Private Placement Real Estate Valuation

Published in the Journal of Business Valuation and Economic Loss Analysis Volume 9, Issue 1, January 2014.

As a result of the Securities and Exchange Commission's relaxation of its prohibition against the marketing of private placements, investors will soon be exposed to a broad array of syndicated commercial real estate investments. Private placement commercial real estate investments are illiquid and so cannot be easily valued by reference to frequent transactions in the same asset in active markets.

We have reviewed over 200 syndicated commercial real estate private placement memorandums and find that virtually all include projected cash flows. This study explains how investors and their advisors can use these projections to develop estimates of investment value. We determine a lower bound for discount rates applicable to the cash flows derived from commercial real estate and apply the methodology to an actual commercial real estate private placement investment. Our findings suggest significant overvaluation by commercial real estate private placement investment sponsors even when using conservative estimates of discount rates.

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