Due Diligence Reporting Services - Alternative Investments

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.

Sponsor Reports

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.

Our Process

Offering Reports

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.

Ongoing Due Diligence

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.

“Bad Actor” Background Checks

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

Ensure the security of your recommendations with decisive background checks in our due diligence reports, or contact us for custom background checks

Due Diligence Reporting

Recent Blogs from FactRight

What is ESG and Where is it Headed?
by Julie Olsen on July 27, 2022 at 6:36 pm
Background
Evaluating Cap Rates Through a Due Diligence Lens
by kevin@factright.com (Kevin Kirkeby) on July 13, 2022 at 4:27 pm
I’m going to get this out of the way right now. I don’t know where cap rates will end this year, and certainly can’t predict where they will be in five years or in ten. What I do know is that cap rate compression has provided a notable tailwind to real estate performance for the past several years. With cap rates for most real estate sectors touching record lows during fourth quarter 2021, I also know that investors should be more closely analyzing each driver of projected investment returns and determining the margin for error embedded in each one. It seems unlikely that cap rates will be below current levels in five or ten years when investment programs currently on offer are looking for an exit.
How Inflation and Interest Rate Increases Could Impact Real Estate-Focused Alternative Investments
by Jeff.B@factright.com (Jeff Baumgartner) on June 28, 2022 at 4:19 pm
Inflation is running at 8.6%, and the Fed has been aggressively raising interest rates. It is now signaling that equally large rate hikes could be on the horizon as early as next month. The Fed’s dual mandate is to keep the economy at full employment while at the same time keeping inflation under control. During the time since the financial crisis of 2008, which includes the Covid-19 slowdown in 2020, the Fed’s primary focus has been on full employment (economic growth). Since 2008 we have witnessed massive government bailouts beginning with the TARP bailouts, to combat the financial crisis, and culminating with $4.6 trillion being spent through the CARES Act and other relief measures to combat the impacts of the Covid-19 pandemic. For more than a decade after the 2008 crisis, economic growth was stubbornly slow, and the pandemic did not help matters. For all the government’s efforts to grow the economy, real economic growth averaged a paltry 2.3% per year from mid-2009 through 2019, and actually contracted by 3.4% in 2020 before growing by 5.7% in 2021. Accommodative monetary policy in the form of quantitative easing, and accommodative fiscal policy in the form of government bailouts conspired to keep interest rates (the cost of borrowing money) low. Unsurprisingly, only because economic growth never really took off, inflation remained subdued. But much like waking up from a party that went on way too long, only to find silly-string on the furniture and a pizza spinning on the record player, what comes next may be sobering.
A Guide to Understanding Proposed Changes to the QOZ Program
by russell@factright.com (Russell Putnam) on May 25, 2022 at 5:16 pm
In 2017, Congress created the qualified opportunity zone (QOZ) program to encourage long-term investment in economically distressed communities by providing investors with three tax incentives to help drive private capital to lower-income areas throughout the country. Since then, the FactRight team of analysts has reviewed several qualified opportunity funds (QOFs) that focus on real estate development located in QOZs. Over the last year, we’ve received a number of questions from broker-dealers and RIAs regarding whether any changes to the QOZ program are on the horizon, and it looks like the answer might be yes.
Largest Interval Funds - A Due Diligence Guide
by gavin@factright.com (Gavin Aydt) on April 6, 2022 at 5:14 pm
An interval fund is a subcategory of closed-end funds and is a Regulated Investment Company (RIC), which is subject to 1940 Act regulation. Shares of interval funds are not generally “redeemable,” which is why the funds are classified as closed-end rather than open-end funds. Interval funds are so named because they must offer to repurchase shares at pre-determined “periodic intervals.” Although interval funds are closed-end funds from a legal standpoint, they also have features that are usually related to open-end funds, which is why they are sometimes described as a hybrid.

Due Diligence Reporting