Investor Capital Managed

Lance Pederson

One of the key data points used throughout the Verivest Sponsor Directory is Investor Capital Managed (“ICM”). Some may refer to this as Equity Under Management (“EUM”). Thereason we chose to go with ICM instead is that it isn’t uncommon for middle-market real estate investment managers to use debt instruments (e.g., Secured Notes) in additional to strictly using equity instruments (e.g., Preferred Equity, Common Equity).

Another common term you’ll hear used is Assets Under Management (“AUM”). We decided against using this because it often includes the leverage or debt used to acquire assets and\or the current fair market value of the assets held. Since not all asset strategies employed by our network members rely on the use of leverage or mark to market, it would not providean apples-to-apples comparison.

For these reasons we went with ICM. It represents the total amount of equity or debt securities purchased - funded and unfunded commitments - by end user investors into currently active investment vehicles managed by the Sponsor Firm.

When a sponsor becomes an official member of the Verivest Sponsor Network, after running background checks on the Principals, one of the first orders of business is determining and validating a member’s ICM. We will ask the member to provide us with a spreadsheet that lists all of their active Opportunities along with the amount of investor capital at risk in each investment vehicle.

We will then request the balance sheets from each of those vehicles that reflect the amount of capital contributed that ties out to the spreadsheet. In the case of a fund that has unfunded capital commitments, we will request an anonymized version of the capital account reconciliation that shows the amount of unfunded and funded commitments. We will then tie the funded commitments to the balance sheet provided by the member. We may ask the member to provide us with a random sampling of redacted subscription agreements to confirm the unfunded commitments are being overinflated.

Here are a few things to keep in mind regarding how we calculate ICM...

  • The ICM does not go down if the member returns capital over the life of the investment vehicle if there are still active investment assets held by that vehicle. Upon disposition of the final asset, or what some refer to as wind-up (or wind-down), the Sponsor’s ICM would be reduced by the total amount of capital invested.
  • The ICM includes any amounts that the member has co-invested alongside other investors.
  • In the case that the member capitalizes single-asset deals or portfolios via syndication or joint venture arrangements and they also have a pooled fund that mayinvest into those deals either as the general partner or limited partner, we would end up counting the same investment dollars twice when calculating ICM.
  • We do not however count the investment dollars coming from a single-asset special purpose vehicle formed exclusively for the purpose of investing into a specific deal or portfolio. The distinction we make is that they are two very different investment products from the investor’s perspective even though they both may have exposure to one or more of the same underlying assets.

You will notice that the search algorithm on the “Find a Sponsor” page, sorts the results in the following order...

  • Verified Gold (high to low by ICM)
  • Verified (high to low by ICM)
  • Unverified and Unclaimed (alphabetically)

You may also notice that some Sponsor Profile do not have an “Investor Capital Managed” figure cited at all. These profiles are either “Unclaimed” or “Unverified”. You may also notice that some profiles have a number displayed but the check next to the number is grayed out.In these cases, the member has provided us a figure that we are in the process of verifying.

LAST UPDATED JANUARY 28, 2021

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Verivest is not registered with the SEC or any similar state agency, is not an investment advisor and does not offer investment advice. Verivest does not (and cannot) recommend any of the sponsors or investment opportunities referenced on this site. All private investments involve risk and uncertainty, including lower than projected returns and a complete risk of loss of invested capital. Investors should conduct thorough due diligence and consult with qualified legal and financial advisors before making any investment decisions.