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News Room

March 25 2015

Virginia company to lead nation in using revolutionary Regulation A+ to raise capital, offer more to investors

Allegiancy to pioneer use of new SEC rules to forge path for small businesses, investors

RICHMOND, Va. — Allegiancy, a Virginia commercial real estate asset manager, is a leader in the national revolution that will help strengthen small businesses, create new jobs and usher in a new era for investors.

As part of the 2012 Jumpstart our Business Startups (JOBS) Act, the U.S. Securities and Exchange Commission (SEC) announced today the new rules for Regulation A+ (Reg A+).

Allegiancy immediately announced that it will file with the SEC to offer $30 million to $50 million in preferred equity securities under the new rules as soon as the rules go into effect.

That will make Allegiancy one of the first companies, if not the first, to use the new Reg A+ rules to build its company, while offering new investment opportunities for investors of all sizes.

“The additional capital will help us grow our firm faster, but Reg A+ is about much more than Allegiancy,” said Allegiancy CEO Steve Sadler. “It has been an excruciating three-year wait since the JOBS Act was passed, and we are eager ramp things up.”

“Reg A+ is all about opening doors for small businesses who previously couldn’t access the capital they needed to grow. For too long, the equity markets have been broken and have kept promising, smaller companies on the sidelines,” Sadler said.

“A+ is about creating jobs and new opportunities. And it’s about giving regular folks access to investments that only a handful of venture capital and private equity bigwig investors have enjoyed up until now.”

The Reg A+ Revolution

While SEC regulations may seem relevant to only a few, Reg A+ has the potential to be a game-changer for countless small businesses and investors, according to the experts.

Reg A+ will increase the amount a private company can raise through a public securities offering from $5 million to $50 million in a year, as well as allowing non-accredited investors to buy in.

But perhaps the most important element is that, with the new rules, companies no longer have to jump through 50 different hoops with each state regulator; the compliance process is now streamlined, affordable and manageable for smaller issuers.

Last year, Allegiancy offered $5 million in securities under Regulation A in order to be poised for Reg A+. The company’s results have been impressive: its Reg A offering was oversubscribed, and it offered a dividend on the day it began active trading, July 15, 2014.

What A+ means to you

Today, small- and medium-sized enterprises (SMEs) account for approximately 75 percent of business activity in the United States. According to the U.S. Census Bureau, they also deliver nearly 100 percent of new job creation. Yet those same businesses have been effectively locked out of the equity markets, and they face continual challenges in raising capital.

Sadler said: “If Reg A+ does what experts and Congress expect, and helps 75 percent of the companies in this country raise capital and grow, that will be a significant change that many will see and feel.”

“Reg A+ can help create a job opportunity for your daughter who is graduating from college next year,” Sadler said. “It can help create a job for your husband or wife who just got laid off. Reg A+ can help grow small businesses on Main Street; previously, money was available to grow only the biggest companies on Wall Street. ”

In addition to helping create jobs and grow businesses, Reg A+ can also help build peace of mind in retirement for the older generation, Sadler added.

“This is also a revolution for the smaller investors who have been subject to financial repression by low interest rates,” he said, noting many 70-year-olds he knows who are still working because their retirement investments aren’t generating enough income.

Reg A+ eliminates limitations that have prevented smaller investors from gaining access to private security offerings. For example, regarding Allegiancy’s Regulation A offering, Sadler said: “Our little company will pay out 6 percent dividends, or $300,000, in the first year to savers and investors who have entrusted us with their capital under Reg A. To have this kind of alternative in today’s low yield 2-percent environment, even for a portion of your retirement portfolio, is meaningful.”

A is for Allegiancy

The capital that Allegiancy raised under Regulation A — and the capital it plans to raise under Reg A+ — will help the company double the size of its team in the next year to reach 25 employees. By 2016, Allegiancy aims to have 50 employees and $5 billion in assets under management.

Similar to a traditional money manager, Allegiancy is a fee-based asset manager of commercial properties. Specialized in office spaces, Allegiancy creates the strategy and execution plan to maximize the value of commercial real estate investments for the owners.

The new capital will help the Allegiancy acquire small competitors, secure additional management contracts, hire more employees, and continue to improve the proprietary technology platform that enables faster decision-making and improved efficiency for the benefit of property owners. (See related article: http://www.richmondbizsense.com/2014/09/02/the-startup-with-the-50m-plan/)

***Allegiancy CEO Steve Sadler is available for interviews with reporters regarding Reg A+.***

What the Experts are Saying

Richmond-based Kaplan Voekler Cunningham & Frank (KVCF) is one of the few law firms regularly providing counsel on Regulation A deals. Partner Robert R. Kaplan Jr. said he has been involved in Reg A+ since its inception, working on enactment of the JOBS Act in Congress and the A+ rules of implementation with the SEC.

Kaplan said he believes Reg A+ will be “a watershed event for businesses and investors.”

“For the past 20 years, the doors have been effectively closed to public securities, except for the largest investors,” Kaplan said.
“But Reg A+ creates an intermediate class of securities available to Main Street and mid-market businesses. It creates enormous opportunities for issuers and investors alike. By creating greater transparency and openness in the market, it will be an important impetus of growth for our economy.”

Moloney Securities is among the few brokerage firms nationwide handling retail Regulation A offerings with secondary market trading, and the company plans to be the premier Reg A+ underwriter.

Richmond-based executive vice president (EVP) of Moloney, James Riggs, called Reg A+, “the democratization of capitalism.”
“Reg A+ will give companies and investors of all sizes the access to capital markets that has been denied them for various reasons.” Riggs said. “By expanding the amount a company can raise in one year to $50 million, Reg A+ is a significant event for our country, and a boost to our competitiveness around the world. Reg A+ will be a win-win for investors, issuers, and all people who work and pay taxes.”

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ABOUT ALLEGIANCY
Allegiancy is changing the business of asset management for commercial real estate owners and investors. With an advanced technology platform and singular focus on serving as the owners’ advocate, the company brings fresh vigor to an often poorly understood business. Combining its proactive Value Assurance? operational rigor with an intense focus on cash flow and profitability, Allegiancy is expanding on a track record of more than four decades of success.

Headquartered in Richmond, Va., and led by a team of seasoned professionals with more than 100 years of experience, Allegiancy manages properties that have outperformed their peers by 45 percent since 2006. The company has approximately $300 million in assets under management (AUM) and delivers clients attractive returns and profitable, hassle-free investments in commercial real estate. Allegiancy grew by 62 percent last year, largely due to referrals from satisfied clients.

More information about Allegiancy may be found at www.allegiancy.us. To schedule an interview with Allegiancy’s leadership, contact Audrey Bevel at audrey@allegiancy.us or 866.842.7545 ext. 204, or (804) 201-7161.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Allegiancy, LLC’s (the “Company”) present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the offering circular dated January 14, 2014 and filed by the Company with the U.S. Securities and Exchange Commission on January 15, 2014. The offering circular, and any supplements or updates thereto, is available on the EDGAR system located on www.sec.gov.