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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 terms of total amount of capital raised and has been growing rapidly over recent years. The proceeds sold through Reg D offerings between 2021 and 2022 equal $4.4 trillion, 13% more than the public offering proceeds during the same period and a 46% increase over the Reg D offering proceeds during 2019-2020. Reg D securities have been sold to increasingly more investors per offering with less amount sold to each investor over the past decade, suggesting an increasing participation in unregistered offerings by retail investors. Broker-dealers and registered investment advisers (RIA) play an important role in reaching retail investors: Offerings sold by broker-dealers with a larger retail clientele and offerings sponsored by RIAs with more highnet- worth individual clients are sold to more investors and raise less capital from each investor. Investors must be wary of potential misconduct and conflicts of interest when hiring intermediaries for investments in unregistered securities. Broker-dealers receiving a higher rate of sales commissions and those specializing in Reg D offerings tend to receive more customer complaints arising from unregistered securities. RIAs advising non-fund clients are more likely to disclose a conflict of interest in regulatory filings when they sponsor Reg D offerings, indicating that these advisers invest their own clients' 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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