Despite recent roadblocks encountered by some investors looking to cash in shares of certain giant nontraded real estate investment trusts, the managers of illiquid REITs have sufficient reserves to meet client demands to redeem shares at the moment, according to a report by Robert A. Stanger & Co., an investment bank that tracks sales of illiquid alternative investments.
“The industry is well positioned to meet redemptions up to the 5 percent quarterly cap with sufficient liquidity sleeves on the balance sheets to fund redemptions without tapping real estate asset sales for 2022 or 2023,” Kevin Gannon, Stanger chairman and CEO, wrote in a January research note.
Meanwhile, 2022 has been another excellent year for alternative investment sales, according to Stanger. “Year-to-date 2022 alternative investment fundraising totaled $98.7 billion through November, a 38 percent increase over the same period of 2021, led by nontraded REITs at $32.1 billion, up 8 percent; nontraded business development companies at $23 billion, up 88 percent; interval funds at $22.3 billion, up 45 percent; and Delaware statutory trusts at $8.6 billion, up 41 percent,” Stanger reported. (InvestmentNews)
WALL STREET CLASHES WITH THE SEC
A planned overhaul of U.S. stock-trading rules was greeted with skepticism by some financial firms that said, essentially, “If it ain’t broke, don’t fix it.” Other traders welcomed the proposed changes and their promise of greater transparency and improved access to markets for investors. The Securities and Exchange Commission in December approved proposed Regulation Best Execution, aiming to give small investors better prices on their trades and reduce some advantages enjoyed by high-speed trading firms. Some financial industry firms say the proposed rule fails to improve on the Financial Industry Regulatory Authority’s outdated best execution rule and continues to permit payment for order flow. Public comment on the proposed rules is open until at least March 31. (Bloomberg)
BIG CHANGES TO RETIREMENT ACCOUNTS
Congress finally passed a bill before Christmas that aims to help Americans save more for retirement and leave their retirement savings untouched and untaxed for longer. The bipartisan bill, the Secure 2.0 Act, raises the age people are required to start withdrawing money from tax-deferred retirement accounts to 75 from 72. It increases retirement savings contribution limits for older workers and provides an increased incentive to people with low and moderate incomes to save in retirement accounts. It also paves the way for more employers to offer emergency savings accounts inside 401(k) plans. Congress finalized the measure as part of a $1.65 trillion omnibus year-end spending bill and President Biden signed it into law. (Wall Street Journal)
E-DELIVERY OF INVESTMENT DOCUMENTS GAINS BIPARTISAN SUPPORT
Bipartisan legislation that would facilitate electronic delivery of investment documents emerged as Congress was wrapping up its session, laying down a marker for work on the issue this year. Reps. Bill Huizenga (R-MI) and Jake Auchincloss (D-MA) in December introduced the Improving Disclosure for Investors Act, which would require the SEC to write a rule that permits registered investment companies, broker-dealers, investment advisers and other financial entities to deliver regulatory documents automatically via email. The SEC currently allows electronic delivery if investors opt in. The legislation would make it the default method while allowing investors to request paper documents. Even though the bill will have to be reintroduced in this Congress, getting the bill in the hopper in December provides momentum for e-delivery. (InvestmentNews)
This report was compiled by the Alternative & Direct Investment Securities Association (ADISA). To stay current on all of the organization’s advocacy initiatives, visit the ADISA website here.