Structures and Strategies
We conduct due diligence on a full range of alternative investment structures and strategies. Alternative investments are offered in a variety of structures, including:
- Real estate investment trusts, or REITs;
- Closed-end funds, including interval funds;
- Business development companies, or BDCs;
- Private partnerships or limited liability companies; and
- Delaware statutory trusts, or DSTs.
Each of these structures involves particular legal, tax, governance and business considerations. Our team of experienced attorneys and financial professionals has the know-how necessary to understand, evaluate and assess programs utilizing each of these structures, and to advise our clients accordingly.
Various strategies and asset classes may be included within a given product structure, including:
Real estate-focused alternative investments constitute an important component of a diversified portfolio. Real estate programs reviewed include non-traded REITs, private real estate funds, Delaware Statutory Trusts, and closed-end or interval funds that invest in real estate assets. Over time our team has reviewed hundreds of real estate programs in myriad structures; this experience has honed our skills in assessing:
- Property underwriting;
- Asset and property management;
- Property accounting;
- Real estate valuation; and
- Property and portfolio performance.
We also have the ability to evaluate the impact of macroeconomic trends, as well as market and submarket considerations on a strategy or portfolio.
We have substantial experience investigating investment products that implement credit strategies, through business development companies, or BDCs, interval funds and other closed-end funds, and other structures. Evaluation of credit strategies involves a number of key considerations, such as:
- The manager’s credit underwriting capabilities;
- The experience and quality of any sub-advisors;
- Borrower profile, including size, creditworthiness, and sector;
- Any equity or other growth component of the strategy; and
- Overall risk profile of the portfolio.
Ultimately, credit strategies can offer investors attractive yield-oriented investments, but it is critical to understand the risk profile of a particular strategy and the manager’s ability to manage that risk.
Private equity is becoming increasingly accessible to retail investors in a variety of structures and strategies. We have experience with a variety of private equity vehicles, including:
- Publicly registered and privately offered funds;
- Investment origination and secondary market focuses;
- Direct investing and investing through underlying funds; and
- Closed-end funds and other fund structures.
Our understanding of the various strategies involved in private equity investing – growth capital, mezzanine financing, buyout, and venture capital – enable us to provide meaningful insight into a program’s investment profile. Our due diligence covers a range of considerations, including the experience and track record of the manager; the risk/return profile of the strategy and portfolio; liquidity considerations; and fees and other structural components of the offering.
Our team has experience evaluating all types of energy programs, including:
- Tax-advantaged drilling programs, from exploratory to developmental, vertical and horizontal, offshore and onshore;
- Royalty programs;
- Programs involving the acquisition and redevelopment of existing, income-producing wells; and
- Programs that invest in a range of income- and growth-oriented energy and energy-related assets.
We have deep knowledge of the structural and tax aspects of energy investing, and partner with a petroleum consulting firm to bring its expertise to bear on analysis of technical aspects of a program’s investments.
Hedge Funds and Commodity Pools
Evaluating a managed fund requires a fundamental understanding of capital markets, sophisticated trading and investment strategies, as well as operations and internal controls. Review of managed funds encompasses a wide variety of products implementing a range of strategies, including:
- Hedge funds;
- Commodity pools;
- Managed futures programs;
- Money managers; and
- Funds of funds.
In addition to understanding and analyzing particular strategies, due diligence of these programs requires an in-depth analysis of operations, including policies and procedures, internal controls, and use of service providers.