Real Estate Securities
For many of our clients, real estate is an attractive investment. However, investing in or issuing real estate securities is a far more complex transaction than the process of selling or purchasing an investment property. Rather than fall afoul of federal and state regulations, turn to a real estate securities lawyer at Mangum & Associates for guidance.
Below, we explain the essentials of the real estate securities markets, and why you need an experienced securities attorney by your side throughout your transactions.
Understanding Real Estate Securities and REITs
When developers and other entrepreneurs offer real estate to prospective buyers, these transactions came sometimes fall under the purview of the SEC and state regulatory bodies. This is particularly true when you’re offering or evaluating a real estate investment trust (REIT).
Rather than research all of the possible investment properties, REITs let investors pool their money in a trust that operates similarly to a mutual fund. These securities let investors diversify their portfolios without having to do the challenging work of identifying and purchasing real estate investment properties.
Typically, U.S. REITs are organized as a corporation that holds significant real estate. Then, investors purchase shares of the corporation. In exchange, they receive a share of the revenue from the REITs real estate operations. However, there are strict criteria that American REITs must meet:
- It must earn at least 75% of its revenue from real estate transactions.
- There must be at least 100 shareholders.
- No more than five shareholders can collectively hold more than 50% of its shares.
- The REIT must maintain specific dividend pay-outs.
Like any complex securities, there are different types of REITs on the market.
- Equity: This is the most common form of REIT. They own and invest in actual real estate. Investors earn revenue from rental and lease payments or selling the property’s resources, including natural resources like timber or energy.
- Mortgage: These trusts earn revenue through mortgages and mortgage-backed securities. In some cases, the REIT issues mortgages itself.
- Hybrid: REITs that gain revenue from both equity and mortgages.
There are also international REITs, which hold property or mortgages in other countries, but these investments are subject to a different array of securities and tax laws — and you should always consult with a securities lawyer and other professionals before you purchase or offer an international REIT.
Raising Capital With Real Estate Securities
Developing a multi-phase property or making significant renovations to an existing piece of real estate can be a costly endeavor. That’s why many businesses across many industries decide to create and offer REITs and other real estate securities. At Mangum & Associates, we guide our clients through these offerings and help them comply with federal and state securities laws at every stage.
Our nationwide team of securities lawyers handles:
- Private placements
- REITs, including:
- Down REITs
- Listed and non-listed REITs
- Private REITs
- Timber, pipeline, and other resource-based REITs
- REIT mergers and acquisitions
- Bond financing
- Industrial, brownstone, and condominium development
- Initial public offerings and follow-on offerings
- Mortgage-backed securities
- Real estate funds
- Tax-exempt development
- Securities compliance
- Syndicated loans
To learn more about our services, simply contact one of offices. We’ll connect you with the correct legal professionals who can assess your needs and help you build an effective real estate securities strategy.
Real estate securities must comply with numerous securities and tax laws and regulations. In addition, businesses that offer these securities must also navigate their real estate transactions. That’s why Mangum & Associates uses a sophisticated, multi-layered approach to real estate securities, taking into consideration the variety of legal, practical, and environmental factors that may impact your investments and profitability.
Navigating Real Estate Securities Compliance
Most real estate securities must comply with both federal laws and state blue sky laws. In other words, they must register with the appropriate regulatory bodies and comply with their laws and regulations. The regulatory framework invovled in these investment vehicles includes the following:
- Investmest Company Act of 1940
- Investment Advisers Act of 1940
- Securities Act of 1933
- Securities Exchange Act of 1934
- State blue sky laws in each state where your securities are offered and sold
To help you navigate these byzantine regulations that involve multiple agencies and organizations, Mangum & Associates works closely with its clients to create comprehensive systems and procedures. We craft creative and effective policies that help codify our clients’ ethical obligations, valuation processes, and other guidelines. If your organization needs assistance with a compliance audit or the revision of your compliance manual or policies, contact our offices.
Litigation and Enforcement Actions
Even the best-laid plans can’t protect your organization from every lawsuit and enforcement action. We also handle cases involving shareholder disputes, regulatory inquiries and investigations, and arbitration. We take a hands-on and practical approach to these matters, with the goal of resolving our clients’ issues as effectively as possible — whether that resolution occurs out of court, during a jury trial, or through arbitration or another form of dispute resolution.
Request a Consultation With a Real Estate Securities Attorney
Mangum & Associates is one of the country’s premier securities law niche firms. We provide our clients with thoughtful and forward-looking legal strategies and advice. And because we have offices nationwide, our team is easily accessible and highly responsive. Our goal is to help our clients understand the implications and opportunities associated with REITs and other real estate securities. To request a confidential consultation, contact us today.