Unlisted Investment Funds the new NT REIT?

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MrGreek16
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Unlisted Investment Funds the new NT REIT?

Post by MrGreek16 »

I’ve been researching for a little bit about these unlisted funds such as unlisted interval funds, unlisted closed end funds, tender offer funds, private credit funds, etc.

Some seem to be composed by legit sponsors (Blackstone, blackrock, pimco, etc) but others are from smaller firms that are creating these illiquid funds.

Are brokers selling shares in these funds as the new NT REIT that they were selling to investors as an illiquid alternative investment?
I know they don’t have the high commission structure but seem to have the same liquidity problem.

That being the case are these things trading in any small secondary markets when retail sellers want to get out of their investment while redemptions are not happening? Seems to me like investors would be stuck in these as well just like what happened with the non traded reits over the years.
alex_686
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Re: Unlisted Investment Funds the new NT REIT?

Post by alex_686 »

Why are you asking? I have worked in this field and I am a bit curious as to what you are finding.

The illiquid funds you are finding from big name firms are probably aimed at institutional investors. These are probably legitimate.

I can make a mild case for private REITs, the classic illiquid assets. Commissions are high here.

The rest - who knows? I don't think these would be new offerings. Rather old and odd stuff that has slide into this market. This is a poor and changeling part of the investment world.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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MrGreek16
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Re: Unlisted Investment Funds the new NT REIT?

Post by MrGreek16 »

alex_686 wrote: Thu Jul 29, 2021 4:30 pm Why are you asking? I have worked in this field and I am a bit curious as to what you are finding.

The illiquid funds you are finding from big name firms are probably aimed at institutional investors. These are probably legitimate.

I can make a mild case for private REITs, the classic illiquid assets. Commissions are high here.

The rest - who knows? I don't think these would be new offerings. Rather old and odd stuff that has slide into this market. This is a poor and changeling part of the investment world.

I am very well versed in the NT reit world but have been researching further into unlisted funds to see what else I can find in terms of retail shareholder liquidity options.

Have also seen the growth with these unlisted funds outpacing those of NT reits especially interval funds and tender offer funds which are popping up far more frequently then NT reits where only few funds have come about in the past years mainly being Blackstone who has dominated the market but has the liquidity available for redemptions which was a key element that made NT reits such a burden to retail investors when they would close or suspend redemptions.

What field did you work in? Anything to do with these unlisted closed end funds (interval, tender offer, private credit)?

I still am lacking to find how much concentration of retail investors have been placed into these investments as I know they are full of institutional money but have been swaying towards the retail side of things for the past couple years. That’s the big push by these sponsors is getting into the retail aspect of the space.

This would lead me to assume that if retail is getting involved in this then there must be a case for a secondary market as redemptions and timing for retail buyers tends to be much less of a hold and wait game then institutional players due to these retail clients needing a higher sense of liquidity in the illiquid asset space.

Would love to hear your thoughts on all this if you’ve been in the space. I understand the private NT reit world very well but this other unlisted alternative investment space is new to me.
alex_686
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Re: Unlisted Investment Funds the new NT REIT?

Post by alex_686 »

MrGreek16 wrote: Thu Jul 29, 2021 5:03 pm What field did you work in? Anything to do with these unlisted closed end funds (interval, tender offer, private credit)?

I still am lacking to find how much concentration of retail investors have been placed into these investments as I know they are full of institutional money but have been swaying towards the retail side of things for the past couple years. That’s the big push by these sponsors is getting into the retail aspect of the space.
I did initial reviews for hedge funds and private equity (institutional) and private REITs (retail).

I have been out of that area for a while, but I don't think your read on increased retail sales is correct. But I could be wrong. There is a fuzzy line between high net worth clients and institutional money.

And I have no idea where one could find info on this. Most of the indexes that track these areas are proprietary, fragmented, and are 2nd rate.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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MrGreek16
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Re: Unlisted Investment Funds the new NT REIT?

Post by MrGreek16 »

alex_686 wrote: Thu Jul 29, 2021 5:10 pm
MrGreek16 wrote: Thu Jul 29, 2021 5:03 pm What field did you work in? Anything to do with these unlisted closed end funds (interval, tender offer, private credit)?

I still am lacking to find how much concentration of retail investors have been placed into these investments as I know they are full of institutional money but have been swaying towards the retail side of things for the past couple years. That’s the big push by these sponsors is getting into the retail aspect of the space.
I did initial reviews for hedge funds and private equity (institutional) and private REITs (retail).

I have been out of that area for a while, but I don't think your read on increased retail sales is correct. But I could be wrong. There is a fuzzy line between high net worth clients and institutional money.

And I have no idea where one could find info on this. Most of the indexes that track these areas are proprietary, fragmented, and are 2nd rate.

Basically trying to see if there would be a space in the market for a secondary market to provide liquidity to these retail shareholders.

That’s the way I fell into researching these types of funds as it wasn’t just a random find. Been on a hunt to see if I can find any markets where liquidity for retail investors with illiquid alternative investments would be needed. Similar to what had happened in the NT REIT space.
alex_686
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Re: Unlisted Investment Funds the new NT REIT?

Post by alex_686 »

MrGreek16 wrote: Thu Jul 29, 2021 5:24 pm Basically trying to see if there would be a space in the market for a secondary market to provide liquidity to these retail shareholders.

That’s the way I fell into researching these types of funds as it wasn’t just a random find. Been on a hunt to see if I can find any markets where liquidity for retail investors with illiquid alternative investments would be needed. Similar to what had happened in the NT REIT space.
There is. There are a few specialized firms out there and they make good money. Institutional money usually negotiate these issues themselves, maybe hiring a consultant or broker.

There are a few key factors to successes. Extensive network. Deep pockets - you are going to be making lots of random cash offers. Ability to do research and due diligence. Long time horizon. Ability to handle risk and uncertainty.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
MrGreek16
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Re: Unlisted Investment Funds the new NT REIT?

Post by MrGreek16 »

alex_686 wrote: Thu Jul 29, 2021 5:34 pm
MrGreek16 wrote: Thu Jul 29, 2021 5:24 pm Basically trying to see if there would be a space in the market for a secondary market to provide liquidity to these retail shareholders.

That’s the way I fell into researching these types of funds as it wasn’t just a random find. Been on a hunt to see if I can find any markets where liquidity for retail investors with illiquid alternative investments would be needed. Similar to what had happened in the NT REIT space.
There is. There are a few specialized firms out there and they make good money. Institutional money usually negotiate these issues themselves, maybe hiring a consultant or broker.

There are a few key factors to successes. Extensive network. Deep pockets - you are going to be making lots of random cash offers. Ability to do research and due diligence. Long time horizon. Ability to handle risk and uncertainty.

These firms do secondary market trades for unlisted interval funds, tender offer funds, unlisted closed end funds? Do you know any specific names I can research.

I know about the firms specializing in the secondary market for non traded REITs. So trying to find firms that are outside of this non traded reit sector.

Looking specifically for firms that provide liquidity for retail investors with these illiquid unlisted closed end funds (interval funds, tender offer funds, private credit funds, etc).

I’ve been researching but haven’t been able to find firms specializing in these funds only in the NT REIT and BDC space but I already know of these firms.
alex_686
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Re: Unlisted Investment Funds the new NT REIT?

Post by alex_686 »

It has been long enough that I don’t have any names at my fingertips. However, these things tend to be super specific or hyperlocal. It is case by case.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
MrGreek16
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Re: Unlisted Investment Funds the new NT REIT?

Post by MrGreek16 »

alex_686 wrote: Thu Jul 29, 2021 7:41 pm It has been long enough that I don’t have any names at my fingertips. However, these things tend to be super specific or hyperlocal. It is case by case.
You seem to be pretty educated about all these illiquid investment/fund types. So just gonna try to pick your brain a little bit if that’s alright with you. What have you heard about church bonds? Any need for liquidity in that market. It’s very hard to find much detail about the industry.

I’m really trying to find specific illiquid investments product that are illiquid and need a secondary market to bring liquidity to the market especially for retail investors. Been searching for a niche to bring liquidity to a market that has illiquid products with little or no redemptions available.
alex_686
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Re: Unlisted Investment Funds the new NT REIT?

Post by alex_686 »

MrGreek16 wrote: Thu Jul 29, 2021 9:49 pm
alex_686 wrote: Thu Jul 29, 2021 7:41 pm It has been long enough that I don’t have any names at my fingertips. However, these things tend to be super specific or hyperlocal. It is case by case.
You seem to be pretty educated about all these illiquid investment/fund types. So just gonna try to pick your brain a little bit if that’s alright with you. What have you heard about church bonds? Any need for liquidity in that market. It’s very hard to find much detail about the industry.

I’m really trying to find specific illiquid investments product that are illiquid and need a secondary market to bring liquidity to the market especially for retail investors. Been searching for a niche to bring liquidity to a market that has illiquid products with little or no redemptions available.
I am a little befuddled. I am not sure which thread to post. I also feel like a librarian who has been ask to recommend a good book in the library. Not sure where to begin.

I have a long an d varied experience here but I am the wrong person to ask. I have spent most of my career in operations, compliance, accounting, and risk management. i.e., dull, risk adverse areas, which is my nature. You are asking a entrepreneurial question, which runs against my grain. But I will give you some insights.

You can trade anything for the right price - it just has to be low enough.

For example, what is the value of a syndicated slice of the Australian touring company of Mama Mia? What are the cash flows? What are the risks? Who would want that?

Many assets don't want to be publicly traded. To trade freely on the secondary market they would have to make fillings with the SEC, etc. They are held to a higher - and more expensive - standard. There are legitimate reasons for this, such as they are small.

Private REITs are on the liquid side of the illiquid assets because they are a standardized product. There are a few basic templates. They have a limited life span which simplifies things. You can run through a checklist to figure out the risks. Cashflows are easily modeled to determine value.

The market for oil wells is smaller. Few people are interested in buying 1/1024 of a oil well. It is too small and fragmented.

I knew a lawyer who traded interests in wind turbines as a side line. Farmers would get a fractional ownership share in the turbines on their land. As a local boy he had the trust of the farmers, he knew a pool of investors in the nearby big city, he had the specialized knowledge

Not everything that is public is liquid. When I was on the margin desk it took us 3 months to liquidate a stock position. A group had purchased a large percentage (greater than 5%, less than 10%) of a small cell phone company. While "liquid", it only trade a few hundred to a few thousand shares per day.

I could go on. You just need to think about market structure. How many people are selling, how many people are buying. Who is going to take the risk of being the middle man, speculating in the security to be that market maker that provides liquidity.

It is a big question, and different asset classes are going to have different answers.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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