Demystifying 506(b) vs 506(c) Investment Offerings: Know Your Options!

Investing in multifamily real estate can be a lucrative opportunity, but navigating the regulatory landscape is crucial. Two common types of securities offerings used in these investments are 506(c) and 506(b). Understanding the differences between these two can help investors and syndicators make informed decisions.

A 506(b) offering, also known as a private placement, allows companies to raise an unlimited amount of capital from an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors. One of the main advantages of a 506(b) offering is the ability to include non-accredited investors, provided they have sufficient knowledge and experience in financial and business matters to evaluate the investment.

Introduced as part of the JOBS Act in 2012, a 506(c) offering allows issuers to engage in general solicitation and advertising to raise capital. This means that issuers can openly market their investment opportunities to a broad audience, including through social media, email campaigns, and public events. However, in order to participate in a 506(c) offering, all investors must be verified as accredited,

00:00 Demystifying 506(b) and 506(b) Investment Offerings: Know your Options
00:39 Introducing Feras Moussa and Ben Suttles
00:52 What is a 506(b) offering?
01:14 What is a sophisticated investor?
02:44 You have to have a pre-existing relationship for a 506(b) offering
03:29 What's a 506© offering?
03:49 You can broadly market at 506© offering
03:58 What's an accredited investor?
05:22 Third party accreditation
10:25 Talk to our Investor Relations Team

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