June 30 2014
Virginia Company Leads Nation In Revolutionary Changes in Small Business Growth
Allegiancy set to open active trading and issue initial dividends to investors in phase one of a capital raising initiative that, if replicated across the country, could increase small business growth and create jobs.
For immediate release: June 30, 2014
RICHMOND, Va. – Today a small Virginia company solidified their place on the cutting edge of a capital fundraising revolution that will strengthen and grow small and medium sized enterprises across the nation, creating jobs and opening doors to new investors.
Allegiancy announced that their Regulation (Reg) A limited public offering of preferred equity securities, which closed in April 2014, will begin active trading July 15 through Moloney Securities. Initial dividends will pay out to investors that same day.
“We are excited about the success of our Reg A offering,” said Steve Sadler, CEO of the Richmond, Va.-based commercial real estate asset management firm. “This initial $5 million issuance was oversubscribed and very well received by the market.”
Even more important than the offering itself, an accomplishment in its own right, is what the offering allowed Allegiancy to do – set the stage to be among the first companies in the nation to raise up to $50 million in equity this fall with Reg A+.
“This capital helps our firm accelerate growth and leaves us well positioned for the coming revolution,” Sadler said of the securities changes coming into effect under Reg A+ thanks to the JOBS Act of 2012. “Reg A+ is about more than just securities and investment. It’s about opening doors for small and medium sized enterprises, who up until this point, couldn’t access the money they needed to grow.”
Reg A, an exemption from certain registration and reporting requirements with the Securities and Exchange Commission, allows companies to raise equity capital up to $5 million in any 12-month period.
But, Sadler said, “in a rapidly growing company, $5 million doesn’t go far” in solving the capital problem small and medium sized enterprises face.
The caps of $5 million combined with the cost and process of filing and state securities laws requirements makes Reg A offerings less attractive to businesses.
“This was a strategic move on our part,” Sadler said of Allegiancy’s Reg A offering, which was among the few done in recent years. “We did it with the express intent of hitting the starting line with full head of steam when the new Reg A+ rules are promulgated later this year.”
Reg A+ increases the amount of capital small businesses can raise under the exemption up to $50 million per year.
Allegiancy’s planned Reg A+ offering aims to raise an additional $15 to $20 million when the Reg A+ rules are in effect, which could come as early as this fall.
THE PLUS REVOLUTION
Today, small and medium sized enterprises account for approximately 80 percent of the business in the U.S., historically delivering 100 percent of new job creation. Yet, it’s those businesses that face continual challenges in raising capital.
If Reg A+ does what experts and Congress expect, and allows that 80 percent of the companies in the country to raise capital and grow, “it creates a job opportunity for your daughter who is getting out of college next year,” Sadler said. “It creates a job opportunity for your husband who just got laid off. It allows businesses to grow on Main Street, where previously it was just the biggest companies on Wall Street.”
Allegiancy alone expects to double the size of its team in the next 12 months to 25 employees. By 2016 it aims to have 50 employees and $5 billion in assets under management.
In addition to job creation for the younger generation, Reg A+ will create peace of mind in retirement for the older generation, Sadler said.
“This is also a revolution for the smaller investors who have been subject to financial repression by low interest rates,” Sadler said, noting 70 and 80-year-olds he knows still working because their retirement investments don’t generate enough income to live on.
Reg A+ eliminates limitations that prevented regular folks from gaining access to the investments that private equity firms and the accredited investors regularly enjoy.
“Our little company will pay out six percent dividends, or $300,000, in the first year to savers and investors who entrusted our company with their capital,” Sadler said. “To have this kind of alternative for even a portion of your retirement portfolio is meaningful.”
ALLEGIANCY’S ROLE IN THE REVOLUTION
Much like a money manager, Allegiancy is a fee based asset manager. Specialized in office properties, Allegiancy creates the strategy and execution plan to maximize the value of commercial real estate investments.
“A commercial office building is a stand alone small business, yet in most cases they do not have any leadership,” Sadler said. “No CEO. No President. No one on site whose equity is at risk. Just a property manager making sure the place does not fall apart.”
As a result, a lot of commercial real estate assets underperform year after year.
“Not because it’s not good real estate, not because someone paid too much for it, not because the economy is weak,” Sadler said. “They’re struggling because nobody is running the business. That’s our job, to step in and provide that kind of strategic direction and tactical oversight.”
The equity capital Allegiancy raised under Reg A, and aims to raise later this year under Reg A+, will fund the acquisition of additional asset management companies and contracts, hire new employees and build the technology platforms needed to enable rapid decision making to take place for property owners.
“Business has been very stable since our 2006 inception as an asset manager and even as the market has gone through violent swings, we have remained profitable,” Sadler said. “It’s because our fee revenue is aligned with the equity owners’ interest and our strong track record of doing what we say we are going to do.”
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 more than $300 million in assets under management (AUM) and delivers to clients attractive returns and profitable, hassle-free investments in commercial real estate.
More information about Allegiancy may be found at www.allegiancy.us.
March 07 2017