Depth. Clarity. Objectivity.
FactRight’s third party due diligence reporting services provide comprehensive, relevant, unbiased review of sponsors and offerings in the alternative investment industry. We put investments like private closed-end 40 Act Funds, non-traded REITs, private equity funds, 1031 exchanges, and debt structures and their sponsors through their paces. We look at asset valuation, prior performance, fee and class structures, exit scenarios, real estate market analysis, and much more to reveal what is significant about the product or sponsor. Our due diligence reports are an essential part of any risk management process.
Pinpointing the nerve center of an investment’s sponsor organization.
The strength of an alternative investment’s sponsor organization is critical to its success. But sponsors can be jigsaw puzzle of regulations, affiliate companies, complex family structures, and legal tangles. We put the pieces together to produce a complete picture of the sponsor. Our reports are based on corporate site visits and in-person interviews of executive management as well as the PPM, tax and legal opinions, quarterly and annual filings, and other documentation.
Each of our sponsor reports includes:
- Meticulous ownership analysis
- Rigorous litigation searches and background checks on key players
- In-depth reviews of operational controls
- Detailed analysis of financial position and operating trends
- Comprehensive review of prior sponsored investment programs
- Detailed risk assessment and risk mitigation information on the sponsor
Let us help you see the big picture like never before. Gain access to our secure Report Center to download our due diligence reports on sponsors, as well as our ongoing series of webinars and white papers on the alternative investment industry.
Illuminating what an alternative investment can bring to an investment portfolio.
Decreased volatility, more active management, and increased diversification are just some of the advantages of alternatives. But their sheer variety can make them seem murky and confusing. Using alternatives effectively requires an informed, in-depth understanding of an investment’s structure and market outlook. Our clear, candid reviews are the most efficient way to determine what role an alternative could play in an overall alternative investment strategy.
Our analysts are experienced in single-asset offerings of $5 million for private real estate offerings, $2 billion interval fund blind pools, and everything in between. Our reports not only illuminate the facts of an investment but also help interpret what they mean.
Our offering reports provide:
- Detailed assessment of an alternative’s strategy, objectives, and target investments
- In-depth discussion of asset management and exit strategy
- Overview of and frank commentary on the investment sponsor
- Vigorous review of key agreements and key players
- Insightful real estate market analysis
- Thoughtful deliberation on an offering’s risks, performance, and unique attributes
Explore our secure Report Center to learn more about how our offering due diligence reports can help construct a best-in-class, truly diversified risk portfolio.
Identifying risks before they become headlines.
Investment risk factors such as an NAV position, leverage, cash flow, and income are never static. Tracking these factors over time is an essential part of maintaining a quality investment platform. The problems that often write down the value of an investment can often be seen long before a default occurs or dividends are cut, if you know where to look.
Keep up with every change that may impair an asset in your alternative investment portfolio using FactRight’s ongoing due diligence services. Our financial experts track multiple metrics for both publically traded and non-traded securities and provide you with sector outlooks and market commentary directly to your inbox.
Our ongoing due diligence includes:
- Annual updates to sponsor reports
- Quarterly updates to offering reports
- Credit quality analysis
- Portfolio asset quality analysis
- Exit scenario evaluation
- Recovery rate trend analysis
- Changes in concentration risks
- Peer comparisons
Keep current on the alternative investment industry by subscribing to our Report Center.
Delivering quick insight into personnel behavior and history.
The stakes of non-compliance are too high to rely on chance. The SEC disqualifies individuals and entities defined as “covered persons” from offering securities in the marketplace, and the presence of an SEC-defined “bad actor” can put an entire investment offering in jeopardy. Our background checks cover all areas described by the SEC’s “bad actor” rules, so you know you’re covered.
Our background searches include these critical sources:
- State criminal and civil records
- Federal criminal and civil records
- The Securities Exchange Commission
- Financial industry records
- Regulatory authority records
- The Commodities Futures Trading Commission
- State securities commissions
- State bank examiners
- The National Credit Union Administration
- Federal banking regulatory agencies
Recent Blogs from FactRight
Is the Conservation Purpose Protected in Perpetuity?
by firstname.lastname@example.org (Russell Putnam) on September 13, 2018 at 8:51 pm
Under the Internal Revenue Code, to be deductible, a conservation easement must be made exclusively for conservation purposes, which requires that the conservation purpose of the easement must be protected in perpetuity. This means that restrictions on the use of the property will run with the land, in theory, forever. The legislative intent behind the perpetuity requirement was to provide for a legally enforceable restriction on the property owner’s use, and any subsequent property owners’ use, of the property that would be inconsistent with the articulated conservation purposes that the easement is protecting. […]
Why Rising Interest Rates Aren't Fatal to Commercial Real Estate Returns
by email@example.com (Brandon Raatikka) on August 27, 2018 at 6:04 pm
It’s understandable that private real estate investors would be sensitive to the relationship between interest rates and commercial property. Cap rates for many asset types are near all-time lows, and the Fed is eyeing more rate hikes in the short term. We share the concerns of many in the alternative investment industry that some syndication structures are not ideal for weathering a rising cap rate environment, especially those featuring underlying assets subject to long-term, bond-like leases. We’ve previously explored the relation between interest rates and commercial property returns on this blog here and here. […]
Sharpen Your Analysis of Programs Involving Conservation Easements
by firstname.lastname@example.org (Russell Putnam) on August 22, 2018 at 8:34 pm
As I’ll describe in this post, I’ve been busy this week helping to educate our clients on how conservation easements work in land investment programs, and I'd like to share some resources that may advance your understanding of these programs.&nbs […]
Drilling Down on Mineral Valuations in Conservation Easement Programs
by email@example.com (Russell Putnam) on August 14, 2018 at 7:53 pm
Over the last few years, FactRight has reviewed a number of investment programs that offer investors a mining or conservation easement strategy. Specifically, investors could elect to cause the investment program to mine an underlying property for minerals, such as granite or limestone, which could produce cash returns to investors over a 20-plus year period. Alternatively, investors could elect to place a conservation easement on the property, which would limit the future use or development of the property and provide investors with a charitable contribution federal income tax deduction based on the value of the easement. […]
Why Onsite Visits are Essential for Sponsor Due Diligence
by firstname.lastname@example.org (Kemp H. Hanley) on August 9, 2018 at 7:11 pm
As an indispensable part of FactRight’s operational due diligence, one or two FactRight team members sit down with management face-to-face at their corporate headquarters. Others on the review team may join the meeting via Skype. We could easily cover the content of these interviews by phone or by email through written questionnaires (which we may do for follow-up interviews or when we’ve already recently met with management in their offices). However, it is very important to personally meet sponsor executives in their offices, particularly upon the start of a new engagement. One might say this is due diligence 101—we like to get a “feel” for the company culture and people who are considering raising capital in the retail channel. […]
Some Thoughts on DST Program Exits
by email@example.com (Brandon Raatikka) on July 12, 2018 at 5:55 pm
These days, we’re seeing increasing innovation in anticipated exit strategies for DST programs. With real estate values currently hovering near or at record highs, and the expectations that rising interest rates will someday take capitalization rates with them, it’s easy to see why sponsors are focusing on exit strategies—today’s products need to be designed to return investor capital in an uncertain tomorrow (while enabling future tax deferral). […]
Best Practices for Investment Committees for Alts
by Gail Schneck on June 8, 2018 at 1:56 pm
Through FactRight’s TrueDiligence platform, we help broker dealers and registered investment advisors select best-in-class programs for their alternative investment platforms. We also work with our clients to ensure that they have time-tested processes and procedures in place for when the regulators come knocking. When it comes to processes and procedures, some of the very first questions our clients ask us relate to the role and composition of the investment committee for alternative investments. Let’s tackle some of the most common questions here. […]
DST Due Diligence in a Hot Market
by firstname.lastname@example.org (Brandon Raatikka) on June 5, 2018 at 9:30 pm
After major tax reform spared the 1031 exchange tax deferral treatment for like-kind real estate, the syndicated 1031 market is poised to extend its growth streak. Equity sales of Delaware statutory trust (DST) offerings were nearly $2 billion last year, a 10-year high. According to Mountain Dell Consulting, equity raised during the first quarter of 2018 was up 50% from the same quarter last year, and the market could be on track for a $2.5 billion year. […]
Tangible Drilling Cost Deductions under Tax Reform
by email@example.com (Russell Putnam) on May 25, 2018 at 5:19 pm
As we all know, the Tax Cuts and Jobs Act of 2017 constitutes once-in-a-generation tax reform. This legislation amended the Internal Revenue Code, reducing tax rates, increasing the standard deduction, and limiting various deductions. In addition to these much-publicized changes, the law also changed the tax treatment for the recovery of tangible equipment costs, allowing for an immediate deduction for the costs of certain types of tangible property. This change in tax treatment has a significant bearing on the potential tax benefits associated with oil and gas drilling partnerships, which may also impact the manner in which drilling partnerships raise and deploy capital. […]
Get More Out of Property Visits for DSTs and Other Real Estate Programs
by firstname.lastname@example.org (Brandon Raatikka) on May 3, 2018 at 3:33 pm
Physically inspecting the underlying real estate before making investment recommendations to clients is important for many reasons. Visits can allow you to verify sponsor disclosures about the property and location, identify risks relating to neighborhood trends, and observe the condition and operation of the property first hand. And then there are the compliance reasons. FINRA Regulatory Notice 10-22 cites “[v]isiting and inspecting a sample of the issuer’s assets and facilities” as what can constitute a reasonable due diligence investigation for broker dealer firms. Property and onsite visits to confirm sponsor disclosures about investments and strategies also fit within customary RIA due diligence practices observed by the SEC. […]