IPA Issues Statement on Proposed Rule Change Relating to Per Share Estimated Valuations for Non-Listed REITs and DPPs

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| Source: Investment Program Association

ELLICOTT CITY, Md., Feb. 3, 2014 (GLOBE NEWSWIRE) -- The Investment Program Association (IPA), a trade association for non-listed direct investment vehicles, today issued the following statement in response to SR-FINRA-2014-006, "Proposed Rule Change Relating to Per Share Estimated Valuations for Unlisted Direct Participation Programs (DPPs) and non-listed REITs (NLRs)." The proposed rule change addresses the reporting of estimated per share values of these securities on customer account statements.

For nearly two years, the Investment Program Association has worked tirelessly with FINRA to revise the existing customer account statement rule to enhance transparency and provide investors with a clearer picture of nonlisted REITs and Direct Participation Programs as they evolve.

Today's FINRA proposal to the SEC takes constructive steps in this direction. Presenting valuations on account statements during the initial offering period which reflect a deduction of commissions and direct marketing fees from gross offering price represents a significant step forward in the evolution of these increasingly popular products, and the IPA supports this part of the proposal. The IPA will continue to support rule changes that align non-listed REITs and direct participation programs with other widely distributed retail investment products, enhance transparency, and promote consistent treatment of different types of retail securities offerings.

While the IPA is supportive of this initiative, its initial review of the proposal raises a number of significant concerns and questions that need to be clearly addressed. Given these concerns and questions, the complexity of the rule, its importance for investors, and its potential economic impact on financial advisors, broker dealers, and the various American industries which rely upon these investments to provide capital for their growth, the IPA believes a 90-day comment period is appropriate. 

Our work on this proposal is the latest initiative the IPA has taken both independently and with federal and state regulators to standardize industry best practices. These initiatives include the Valuation Guideline and Modified Funds From Operations (MFFO) Guideline developed by the IPA. Adopted in April 2013, the Valuation Guideline provides for expanded involvement of independent third-party valuation experts, standardizes methodology and frequency, and improves disclosure relating to the reporting of non-listed REIT valuations. The Valuation Guideline is expected to be used across the industry in 2014.  Adopted in March 2011, the MFFO guideline is used by more than two-thirds of public non-listed REITs to report operating results. Later this year, the IPA expects to introduce standardized methodologies for the determination and reporting of investment performance by operational and liquidated non-listed REITs.

The IPA will provide a detailed response to this proposal during the comment period designated by the SEC.

The Investment Program Association (IPA) was formed in 1985 to provide effective national leadership for the direct investment industry. The IPA supports individual investor access to a variety of asset classes not correlated to the traded markets and historically available only to institutional investors. These investments include public non-listed REITs (NLREITs) and Business Development Companies (BDCs), Energy and Equipment Leasing Programs, and private equity offerings. For the last 28 years, the IPA has successfully championed the growth of such products, which have increased in popularity with financial professionals and investors alike. Direct investments are held in the accounts of more than 2 million individual investors, and the IPA's member companies operate or have properties in all 50 states. The mission of the IPA is advocating direct investments through education. Access the wealth of IPA educational materials here, or visit the IPA online for more information about becoming a member.

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IPA MEDIA CONTACT:
John McInerney
Makovsky
212.508.9628