April 27, 2017

NTR and BDC March Sales Recover

April 28, 2017 | by by Beth Glavosek | Blue Vault

In March, we witnessed a significant one-month recovery in sales of nontraded REITs (NTRs) and Business Development Companies (BDCs). NTR sales in March were $622.6 million and BDC sales were $94.1 million, according to Blue Vault research.

What accounts for this sudden change, and can it be sustained? We asked some industry spokespersons for their thoughts and perspectives.

Securities America’s Pete Zimmerman offered some observations about this sudden surge in sales. “I think that there’s been a lot of uncertainty in the industry, and perhaps advisors are starting to rebuild their confidence in recommending these investments,” he says. “We’ve seen the DOL fiduciary rule implementation delayed, and at the same time, advisors have had a chance to become more comfortable with new compensation structures.” The combination of delaying pending regulations for the foreseeable future and gaining familiarity with the ‘new norm’ of compensation may have propelled advisors forward.

1^st Global’s Mike Pagano says that nontraded REIT sales at his firm are up 22% over sales levels at year-end 2016. “I think we’re starting to see an uptick because advisors’ comfort levels around FINRA 15-02 have increased,” he says.

Zimmerman points out that, any time that change is introduced, it can take a while to fully embrace it. “Clouds have lifted a bit, so to speak, and advisors may have needed time to adjust to changes over the last couple of years. They also may be attracted to new products that sponsors are rolling out,” he says.