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RCAP Sees Big Jump in Investor Interest

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RCS Capital (RCAP), which owns the Cetera Financial Group of 11 independent broker-dealers, said Thursday that its wholesale business increased equity capital by 46% in March.

Three RCAP units – Realty Capital Securities, Strategic Capital Distributors and Hatteras Funds – issued $476.3 million to investors last month vs. $326.8 million in February. Sales of nontraded direct investment programs were $433.5 million in March 2015, up close to 45% compared with $300.1 million in February.

As a result of these increases, total equity raised during the first quarter of 2015 was $1.1 billion.

In the fourth quarter of 2014, the company had $946 million in total direct investment sales, including those carrying the American Realty Capital brand, down substantially from $2.1 billion in Q4’13. These results represented a year-over-year drop of 55% in equity sales and a 51% decline in revenue tied to these sales.

Investors and broker-dealers began shunning some RCAP products after American Realty Capital Properties (ARCP) announced $23 million of accounting errors in late October.

“Following our March equity sales results, we remain confident with the continuous improvement in our overall capital raising initiatives over the past several months,” said Realty Capital Securities CEO Bill Dwyer, in a press release. “We thank all of our selling group’s financial advisors who have embraced our platform to meet the critical needs of their clients as evidenced by the $1.1 billion equity raised in the first quarter.”

During March, two Realty Capital Securities-distributed nontraded REIT programs, American Realty Capital Trust Global and American Realty Capital Healthcare Trust II, announced plans to list their shares on a national exchange in the second and third quarter of 2015, respectively. Three other Realty Capital Securities-distributed investment programs are currently closed, while three different programs should close to new investments by July 2015.

“We believe these liquidity events, as well as those anticipated from currently and expected closed direct investment programs, will be significant catalysts for increasing sales in 2015 as investors recycle capital into our second and third generation programs,” Dwyer explained. “In aggregate, there is nearly $50 billion of equity capital in closed nontraded investment programs across the industry that we believe will be a fundamental growth driver in the industry and a key to our long-term platform success.”

— Check out American Realty Capital Names Rufrano CEO, Alters Board on ThinkAdvisor.