DST Investment Risks

DST investment risks that create materially-significant investment loss severity risk can be more effectively managed for the benefit of the DST sponsor, the buy-side broker-dealer, the sell-side soliciting dealers, registered investment advisors, lenders and the investors who become future beneficiaries via the first end-to-end solution specifically designed to help prevent materially-significant investment loss severity risk from accruing in commercial real estate property operating businesses.  The focus is on preventing asset obsolescence caused by technology advances from reaching the point of causing significant loss potential.  This calls for strong risk mitigation program support that is ongoing, proactive and affordable.  It starts with default risk due diligence reviews of the business plan of operations, enterprise risk management plan, ERM-enterprise-risk-management-plan-screenshotmanagement reporting plan, and then extends to the market opportunity, investment opportunity cash flows forecasts and ongoing monitoring to help prevent loss severity risk from becoming the unavoidable reality that so often can be the case.

DST investment risks are legion and the mandatory 10-year holding period all but guarantees that a market disruption (or series of disruptions) large enough to create a liquidity crisis that could end in a bankruptcy petition or foreclosure event is bound to occur.  The conflicts-of-interest that frequently attend these transactions also create the potential for losses – and everyone knows it.  The situation has become such a concern that professional liability insurance carriers are starting to exclude commercial real estate private placement offering securities from liability coverage and almost every DST comes with a built-in mechanism (called a “Springing, LLC“) to try and stem the bleeding when things go down the tube.

INVIZEN offers a new technology platform and program that is specifically designed to help address this legion of risks that accompany DST investments.  The INVIZEN Real-Time Status (or RTS) system is a proactive, real-time monitoring program that provides underwriting reviews to help qualify the project earnings opportunity and then an ongoing (post-funding!) monitoring program designed to provide up to 24 months of advance notice of market disruptions and other issues that could lead to asset impairment or investment non-performance.  The secret is the amazing real-time underwriting technology.  Think about it: they don’t blow up a month or six months or even two (2) years after underwriting – it’s further down the road when the problems start because you really can’t forecast with any level of acceptable accuracy beyond that 2-year horizon.  The problem has been that underwriting takes weeks or months and costs too much.  INVIZEN solves both of those problems by operating in real-time and being very affordable (check our pricing and see for yourself).

RTAF Summary Report Screen ShotThere 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

FINRA Regulatory Notice 10-22 makes it really clear the government wants the CRE finance industry to clean up the property due diligence processes attending CRE securities private placement offerings pursuant to the Direct Participation Program.  NNN property due diligence requires more of us now than just verifying the lease and making a guess about subjective measures such as “tenant quality”.  Sears, ToysRUs, Caldor – the list goes way back in time and yet the losses have continued.

CRE Investment Loss Severity Risk Prevention Program
Real-Time Status Asset Loss Program Operations Real-Time Phases

INVIZEN offers the only end-to-end solution specifically-designed to help end loan and investment losses in CRE securities private placement offerings by addressing the totality of the underwriting and due diligence issues in a real-time, proactive environment that only gets started with pre-closing due diligence.  The INVIZEN RTS program is designed to help prevent the key risks from becoming future asset impairment problems while also proactively managing and/or deterring investment fraud, management performance and foreclosure default event exposure.

If your investment or loan doesn’t have the backing of INVIZEN monitoring, it’s not because of the cost and that would make you wonder why and whether or not it is an appropriate investment for your risk appetite.  Find out more by calling us today at 832.663.9634.