Investments in 1031 exchange commercial real estate transactions, including 1031 net lease transactions, represent a special category of risk due to the mandatory 10-year investment holding period requirement, and this requires strong investment loss risk mitigation. 1031 CRE net lease transactions are also complicated due to the following conflicts-of-interest issues that can create real headaches for 1031 CRE net lease transaction sponsors, issuers, lenders, investors, broker-dealers and investment advisors, alike:
- The subscriber base includes those who are seeking protection against capital gains taxation as well as those who are not, thus placing the investors in conflict with each other in a 1031 net lease transaction; and
- Most 1031 CRE net lease transaction sponsors are vertically-integrated businesses that not only sponsor property investment opportunities, but also provide affiliated property management, asset management, operations and other services that place them in a conflict-of-interest with the capital investors and lender.
FINRA, the SEC, the several states and professional liability insurance carriers are cracking down on these transactions because of the mounting problem of future investment fraud claims and the costs defending these claims entails for the CRE finance industry. INVIZEN offers a sane path forward with the only end-to-end solution specifically designed to help manage the extended market risk exposure the mandatory 10-year holding period creates by addressing the source of future investment fraud claims – the potential for future CRE property operations bankruptcy events and foreclosure events with our unique underwriting and monitoring program that also provides proactive loss severity risk reduction due to future claims of investment fraud to the mix.
Whether you are a sponsor seeking a capital financing solution, a broker-dealer on the buy-side, a sell-side soliciting dealer or RIA, the INVIZEN Real-Time Status (or RTS) Asset Care Protection Program is specifically-geared towards putting an end to the investment fraud “cycle of pain” by virtue of our amazing technological solution. The key benefits of this solution are:
- RTS provides an affordable way of having the transaction re-underwritten each and every month of the asset holding period to help guard against term default risk, maturity default risk and technical default risk because RTS operates in a proactive, real-time environment that processes in 2-3 days, not 4-8 weeks.
- RTS provides efficient underwriting of new issue transactions (buy-side) for sponsors and broker-dealers to expedite the entire process and reduce the time it takes to get to market because our underwriting program operates in real-time, as does our feasibility analysis program and valuation program that support the underwriting program operations.
- RTS is focused on a simple premise: the continuing changes in consumer purchasing preferences that happen in a healthy economy that lead to advances in technology that create market disruptions that lead to some businesses failing. RTS is designed to provide up to 24 months ADVANCE NOTICE of these events so that assets can be re-positioned, re-developed or an orderly exit (not fire sale!) can be contrived before asset value impairment creates the potential for future claims.
- RTS helps guard against the most common forms of administrative default events that could lead to administrative foreclosures because we monitor property level operations on an ongoing basis.
There is so much more to the INVIZEN Real-Time Status Asset Care Protection Program that INVIZEN was intentionally designed to support:
- CRE Developers & Sponsors. Developers and sponsors seeking capital financing have the advantage of a systemic solution that provides the support needed to increase the odds of a successful capital financing outcome that saves time, money and reduces their capital investment risk.
- Investors & Lenders. Investors and lenders seeking to participate in commercial real estate securities private placement offerings and other credit instruments have the advantage of a systemic solution that provides the highest practical investment performance assurance we can contrive. INVIZEN gives investors and lenders the proactive investment loss severity risk prevention and monitoring they really need, but have never been able to obtain in the past.
- Broker-Dealers & Registered Investment Advisors. Securities broker-dealers and registered investment advisors on both the buy-side and sell-side of the transaction have the advantage of a reporting system that provides FINRA compliance support, protection from future investment fraud claims, increased transaction velocity and the opportunity to increase their operating margins – all in one package. If your firm doesn’t have this approach, then you are still operating in an environment that will penalize your opportunity to profit and control costs.
Talk to an INVIZEN representative today for more info
There is so much more and you can have it for so much less than what you are already paying in higher insurance premiums, underwriting costs, due diligence costs and loss of business. Find out what we can do for your 1031 net lease project opportunity by contacting INVIZEN today at 832.663.9634.