27A — March 15 - 28, 2013 — 1031 Exchange — Mid Atlantic Real Estate Journal
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REAL ESTATE INVESTMENT SECURITIES ASSOCIATION, INC. www.reisa.org
By John Harrison, REISA CEO/Executive Director of REISA REITs, 1031s, DPPs, etc. = Alternatives?
The label “alternative” in alternative investments is a matter of dates. What are now considered alternative investments were in fact the original mainstream investments, and the stock market—a fairly recent invention in history--was at first the “alternative.” Indeed the earliest historical mentions of investing (Bible, Code of Hammurabi) had to do with land and its use. Of course, the Books of Moses spend a lot of time on land development and assignment – even the first physical battle for resources (Cain killing Abel) was about farmers displacing shepherds for the use of land. There are, in the Code of Hammurabi and later in the writings of Aristotle, mentions of debtors and creditors and land ownership and wealth creation. What does all this mean for us now? First, perhaps a better description of alternative investments is “non-correlated;” that is, not correlated to the traded markets of stocks and bonds—a very small value beta. Secondly, real estate—whether traded publicly, privately, in trusts or otherwise—has always been a key element of investments. Julius Caesar’s good buddy (or at least someone who didn’t try to kill him), Marcus Crassus, is on the list of the top ten richest of all time (in current U.S. dollars) for his keen ability to manage land. In his century and up to the Age of Discovery, wealth grew primarily as the result of income derived from the land (not from its appreciation and resale). Limited partnerships and other forms of direct investments involving the exploration of new worlds took off, but still they were what would today be called alternatives. Interestingly enough, the exchanges begun during Europe’s colonial period resulted in China and India becoming the world’s top producers of exchanged goods in the mid 1700s; they were the centers of a sort of early manufacturing economy before the Industrial Revolution. Today’s alternatives market is simple in concept (not too different from what Marcus Crassus had in mind), but complex in application primarily due to regulatory requirements. How to know about business development companies (BDCs) or non-traded real estate investment trusts (REITs), nuances of 1031s, Delaware statutory trusts DSTs), or best practices in tenant-in-commons (TICs) are all part of the landscape for the current professional in alterna- tive investments. Helping the professional measure and plow this landscape is what REISA—the alternative investment’s trade association—is all about. Like the original alternative investments themselves, REISA began with real estate but now handles so much more. REISA covers the alternatives market for the professionals in the industry primarily by hosting educational events where the sponsors (originators) of various investment prod- ucts (non-traded REITs, for example) and their sales distribution chain (broker-dealers, registered representatives), along with the related service providers (accountants, attorneys, due diligence providers), all meet to discuss and explore the various aspects of the alternatives market. Here’s a sampling of session topics from REISA’s upcoming Spring Symposium (April 14-16, 2013) in San Diego: Interval Funds: Are They Really Just Another 40 Act Fund?; BDC Analysis: Understanding Differences in Strategies; NAV Offerings and Marketplace Acceptance; The 1031 Legal Land- scape: What Are the Tax Rules and Benefits?; 1031 Private Placement Products: An Explanation of DSTs and Energy Products; 1031 Due Diligence: How Should I Evaluate the Opportunities?; and regulator updates from FINRA, SEC and NASAA. It is important to note that REISA meetings do not include canned sponsor commercial pitches, but instead are neutral presentations and moderated panel discussions designed and closely monitored by potentially competing peers, cooperating to put on the most educational program for the audience. Says Michael Weil, president of American Realty Capital and volunteer president of REISA, “There’s no better place, no better format to find everyone who wants to lead and learn in the direct placement program investment space than REISA.” John Harrison
Upcoming REISA Conferences
2013 Due Diligence Forum July 11-12 Ritz-Carlton, Dove Mountain Tucson, AZ
2013 Annual Conference & Trade Show October 6-8 Caesars Palace, Las Vegas
2013 Spring Symposium April 14-16 Sheraton San Diego Hotel & Marina
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