Non-Traded Industry Highlights – Q3 2017

Thursday, January 11th, 2018 and is filed under AI Insight News

by Laura Sexton – AI Insight Senior Director-Project Management 

Non-Traded REITs

  • Non-traded REITs raised $1.18 billion in Q3 2017 and had raised $4.28 billion year-to-date as of September 30, 2017.
  • The industry is poised for its slowest capital raise year in over a decade.
  • Blackstone Real Estate Investment Trust, Inc. led the capital raise pack, raising over $1.25 billion or approximately half of the capital raised in the industry. Carter Validus came in second, raising $292 million.
  • $14.3 billion in AUM managed by 24 actively-raising non-traded REITs, with 56% in diversified funds. ($88 billion including closed non-traded REITs that have not yet liquidated).
  • Average distribution rate of 5.81%, down from 6.17% in 2012.
  • Average debt ratio of 44.04%, relatively unchanged from 2012.
  • The average interest rate on debt has declined approximately 80 basis points over the last five years from 4.61% in 2012 to 3.81% as of September 30, 2017.
  • New entrants to the non-traded REIT space through Q3 2017 include Nuveen (Nuveen Global Cities REIT, Inc.), Starwood Capital (Starwood Real Estate Income Trust, Inc.) and Cantor Fitzgerald (Rodin Income Trust, Inc.), in addition to Blackstone’s registration in 2016.
  • The entrance of institutional money managers into the market may signal better times to come.



Non-Traded BDCs

  • The industry raised approximately $301.1 million in Q3 2017 and has raised $1.08 billion year-to-date as of September 30, 2017.
  • The average YTD return for non-traded REITs was 4.98% as of September 30, 2017 (NAV return).
  • Non-traded BDCs have maintained a steady focus on senior debt, but have increased their allocation to variable rate debt over the last five years from an average of 57% in 2012 to an average of 80% through Q3 2017.
  • Several funds have converted from the non-traded BDC structure to a closed-end interval fund structure to allow for greater flexibility.


Closed-End Funds

  • According to, the closed-end interval fund segment of the market has seen the greatest growth trajectory of all of the non-traded investment vehicles, with a 46% increased in total net assets over the last 12 months. As of September 30, 2017, there were 23 interval funds pending registration with the SEC.

1031 Exchange Programs

  • The number of 1031 exchange programs have increased as commercial real estate prices have appreciated.
  • The number of programs offered in 2017 was more than double 2012 levels with an offering amount of nearly for times.
  • Inland Private Capital and Passco Companies dominated the landscape, capturing 30% and 12% of offering amounts, respectively, over the last five years.



  • Private program offerings have declined since peaking in 2013, outside of an increase in preferred investment programs.
  • The number of preferred offerings and offering amount, while still lower than other non-traded segments, has increased significantly in the last five years with 2017 seeing a record-setting $2.1 billion in seven programs offered.


*Charts Source: AI Insight

2017 Year-End FAQ with AI Insight CEO Sherri Cooke

Tuesday, December 19th, 2017 and is filed under AI Insight News

As 2017 comes to a close, AI Insight CEO Sherri Cooke reflects on the past year and looks forward to what’s coming up in 2018.

Q: What are some of the key reflections you have about 2017 and some points of interest for the coming year?

SC: This year we increased the number of RIAs using the AI Insight platform, so I’m glad that we’re able to support RIAs as this channel continues to grow. We look forward to continuing to expand these relationships in 2018. We also made significant upgrades to our AI Insight Education Module functionality, and we’ve received a lot of positive feedback on the updates. We’re always working to make the platform easy to use and add more valuable capabilities.

One of the most exciting highlights as we close out 2017 is the fact that we will be launching a new feature with expanded alternative mutual fund research capabilities in the new year. Advisors will be able to compare the details and financial performance of alternative investment mutual funds with reporting and documentation features our subscribers have come to rely on for more traditional Alternative Investment research. We’ve just hired Lucas Johnson who was a due diligence analyst with National Planning Holdings, Inc., where he specialized in due diligence reviews of liquid alternatives and other alternative investments. He’ll be stepping in to help launch our liquid alternative research program.  You’ll see much more about this in the first quarter.

From an industry perspective, there’s been a bit of a relief relative to the DOL Fiduciary Rule implementation date, yet it doesn’t change the focus on compliance and regulatory scrutiny. The continued market run is remarkable, to say the least, inspiring growth and confidence. But that kind of house-of-straws confidence can increase concern about the negative consequences of a potential market correction. Smooth or bumpy, it’s our commitment to help advisors and clients manage the environment no matter what 2018 may bring.

Q: What are some of the major misconceptions you see that advisors have about alternative investments?

SC: A couple of misconceptions come to mind. The first would be that illiquidity or alternatives are intrinsically inferior planning tools.  Another would be the challenges around compliance and regulatory scrutiny.

Q:  Ok – let’s address the liquidity issue first.


I don’t believe that liquidity is the true issue.  If a client’s portfolio is well diversified including appropriately positioned liquid and illiquid investments, then the illiquidity can actually be a true positive. It can prevent clients from selling investments when their motivation is emotionally-driven or reactive to the market.

Second, some people use the generalized claim that alternatives haven’t performed well over the last several years.  As with all securities, some do well and some do not – and as with other investments there have certainly been a share of alternatives that haven’t performed as expected. However, there are a lot that have performed well when diligence has been taken in selecting and vetting – and they have been sold correctly. If a key goal is for alts to be used as a portfolio stabilizer, then we wouldn’t have seen them stand out during the crazy bull markets we’ve experienced. That’s not one of their key purposes.  Many advisors want a significant premium for the illiquidity, but I don’t believe you should expect to get both the downside market protection in a bear market and returns that exceed the average in bull markets from the same vehicle.

It’s a challenge for me when I hear the expectation of alts always having to perform. Stocks lose value all the time. It really comes down to making sure these products are properly sold and positioned within client portfolios; and – as with all investments – conducting the best possible research and diligence to select best in class.

Q: You mentioned compliance – we know that compliance is often an issue for advisors in considering alternative investments and regulatory scrutiny continues to increase. What is your experience with compliance issues?

SC: Compliance is one of the things that motivated me to create AI Insight in the first place. I wanted to build capabilities to facilitate due diligence and proper compliance along with education and documentation of these efforts when selling complex products – those products that the regulators have called out as needing heightened supervision or training.

From a company perspective, we have found in any situation of which we’re aware, if you stay up-to-date on the requirements around selling any type of investment – and make sure everyone involved is aware of their obligations, adhering to the process, plus documenting all efforts – then the regulators are generally satisfied.  That’s been our experience with our clients and their audits.

If you fail to make these efforts up front and you’re inconsistent in how you conduct your business from a compliance perspective, you’re just leaving yourself open to trouble from a client who ends up unhappy about something or getting in the news for the all the wrong reasons.

Q: You are involved in mentoring young women in the financial industry. Tell us about it.

SC: A group of members of the Investment Program Association (IPA) formed the Women’s Initiative Network (WIN).  One of our key goals has been to help promote and support women within the financial services industry, which traditionally has been very male-dominated. I launched our first local initiative with Ohio State University’s Fisher School of Business this past year.  We had a group of young women who had an interest in Financial Services get together once a month to hear stories about the journeys of women in our area who have been successful in the financial world.

We talked through some of their concerns and real-life challenges they’ve encountered or that we, as mentors, have experienced.  We also introduced them to many unknown and non-mainstream facets of the investment world, which was really exciting. 

Q: What is your focus for 2018?

SC: From a business owner’s perspective, ensuring that our team and our product continues to maintain consistent integrity of value and exceptional service; this is the backbone of our business – and making sure that our AI Insight team is challenged and fulfilled in their roles within our company.

From an industry perspective – we believe that there is a tremendous amount of value for advisors to differentiate themselves and bring really great opportunities through the thoughtful and diligent understanding of alternative products. We provide this value by building and bringing together our network of broker-dealers, advisors, RIAs, alternative investment firms and industry partners.

Therefore, as in past years, I always look forward to working with our business partners to explore new possibilities and find what more we can bring to the table for our customers in the new year.

As I’ve already mentioned, I’m excited about developing even more education and support in the liquid alternatives space. These funds are gaining increased awareness from a due diligence and compliance perspective. We currently have education and training for 30 closed-end funds available on our platform and expect to see real growth in this area in the coming year. We’ve expanded our CE course offerings to include a FINRA alternative mutual fund course and a course on interval funds. Plus, we’ve recently published a comprehensive white paper called, “Understanding the Complexities of Liquid Alternatives” to help support these growth plans in 2018. I’m really proud of our efforts when it comes to education on key industry initiatives and concerns, so we are particularly excited about the new plans around the liquid alts sector for the coming year. It’s important to our entire team that we continue to do our very best to evolve with the industry – hopefully always a few steps ahead of the primary curve – to bring our customers what they need to confidently offer their clients a full and rich palette of investment solutions. That’s our goal for 2018…and every year after!

Sherri Cooke is the CEO and founder of AI Insight, Inc. and has been in the financial services industry for over 25 years. Cooke formed AI Insight in 2005 with the primary goal of providing the financial planning community with a consistent database of alternative investment programs. 

AI Insight White Paper: Understanding the Complexities of Liquid Alternatives

Friday, November 17th, 2017 and is filed under AI Insight News

Get ahead of the curve on liquid alternatives with our new white paper, “Understanding the Complexities of Liquid Alternatives”, written by Laura Sexton, AI Insight Senior Director-Program Management.

In this paper, we discuss complexities, risks and how to protect your business when you’re working with liquid alternatives. Plus: 

  • The definition of liquid alternatives
  • Complexity and why this is important
  • The liquid alternatives universe
  • Liquid alternative strategies and common risks
  • Action steps to protect your business

Read the White Paper now.

Alpha Academy 201: A Private Equity Education Program

Wednesday, April 12th, 2017 and is filed under AI Insight News, Press Releases


Join Triton Pacific and AI Insight on Thursday, May 4, 2017 at 4:00 p.m. ET for Part 2 of a complimentary private equity CE webinar.

Overview: Earn one CE credit toward the CFP® and other professional designations with Alpha Academy 201. The program aims to provide a deeper knowledge of how private equity enhances portfolio performance, including industry analysis, due diligence, deal structure & transaction negotiation, financial modeling and buyouts.
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DOL Deconstructed: Regulations, Guidance, and Suggestions on Documenting Diligence

Tuesday, March 14th, 2017 and is filed under AI Insight News

The first in a series of bite-sized articles on the DOL fiduciary rule.

With all of the uncertainty around whether the DOL’s conflict of interest rule will be implemented and maintained as a whole, it is important to look at some of the central themes of the ruling, which we believe are generally good practices for advisors and broker dealers to protect themselves regardless of the DOL’s final outcome. The first of these is documentation. In this brief article, we will discuss the current regulation and guidance around alternative investment documentation and then provide suggestions on what you can do to comply.
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The New DOL Fiduciary Rules: What Do You Need to Know and Do Now?

Friday, January 6th, 2017 and is filed under AI Insight News

AI Insight is pleased to present a free CE webinar, “The New DOL Fiduciary Rules: What Do You Need to Know and Do Now?,” with Marcia S. Wagner, Principal of The Wagner Law Group, on Thursday, January 12, 2017 at 4:00 p.m. ET.
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A Royal Opportunity: Why Energy Royalties? Why Now?

Saturday, September 3rd, 2016 and is filed under AI Insight News


 Join AI Insight for a special webinar with Resource Royalty on Tuesday, September 20, 2016 at 4:00 p.m. ET on A Royal Opportunity: Why Energy Royalties? Why Now?

We are pleased to welcome guest speakers Bob Howard, Managing Partner, Resource Royalty and Sean Caldwell, Senior Vice President of Sales, Resource Royalty, who will conduct an engaging presentation on energy royalties.

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AI Insight Welcomes Two New Senior-Level Hires

Thursday, March 17th, 2016 and is filed under AI Insight News

AI Insight is excited to welcome two industry veterans to its team.

Laura Sexton, Senior Director, Program Management, will lead a team of analysts responsible for entering the Alternative Investment data that powers AI Insight’s platform.

Patrick McGowan, Senior Director, Broker Dealer Sales, will develop relationships within the broker dealer community and help broaden institutional growth opportunities with respect to AI Insight’s RIA platform.

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As the Demand for Alternative Investments Grows, so Does the Need for Advisor Training and Education

Friday, February 19th, 2016 and is filed under AI Insight News

Retail and institutional investors turned to Alternative Investments last year for increased portfolio diversification, income benefits and the opportunity to invest in assets that are non-correlated to the traditional stocks, bonds and cash investments.

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AI Insight Opens Platform to Individual Financial Advisors and RIAs

Wednesday, November 18th, 2015 and is filed under AI Insight News

AI Insight is excited to expand its Alternative Investment research, training and compliance documentation platform to individual Financial Advisors and RIAs. This new platform access is geared towards those who do not have access to AI Insight through a Broker Dealer subscription.

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