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Understanding Private Placement Investments in Commercial Real Estate

By David Sheets | Jul 09, 2025

In today’s evolving investment landscape, commercial real estate continues to stand out for its potential to deliver consistent income, appreciation, and diversification. While many are familiar with publicly traded REITs, private placement investments remain a lesser-known but powerful strategy – especially for accredited investors seeking direct access to high-performing assets.

At Avistone, private placements are central to how we connect investors with institutional-quality, income-producing properties. In this blog, we’ll explore what private placement real estate investments are, their key advantages and risks, and how Avistone helps simplify and strengthen this opportunity.

What is a Private Placement in Real Estate?

A private placement is a method of raising capital by offering securities directly to a select group of investors rather than through public markets. These offerings are typically made under SEC Regulation D, allowing companies like Avistone to legally raise funds without registering the investment with the SEC, provided it’s only offered to accredited investors.

In real estate, private placements generally involve group ownership of a specific property or portfolio. Investors purchase equity shares in a real estate holding company and receive a portion of the property’s income and appreciation – without the burden of day-to-day property management.

The Advantages of Private Placement Real Estate Investments

Private placements can offer meaningful advantages for long-term, risk-conscious investors. Here’s what makes them attractive:

1. Access to Institutional-Quality Assets

Through private placements, individuals can invest in high-value commercial real estate typically only available to institutional investors. At Avistone, we focus on multi-tenant flex and shallow bay industrial properties, targeting assets with strong market fundamentals and value-add potential.

2. Passive Income Potential

Investors typically receive quarterly income distributions generated from property operations. This cash flow can be attractive for those seeking passive income and long-term yield without active management.

3. Portfolio Diversification

Private placements provide a hedge against stock market volatility. Real estate tends to perform independently of equity markets, offering a stabilizing asset class in a broader portfolio.

4. Tax Efficiency

Real estate private placements often offer tax advantages such as depreciation deductions, which can reduce taxable income – even while investors are receiving cash distributions.

5. Aligned Interests

At Avistone, we invest alongside our investors, creating strong alignment. Our private placement structures often include preferred returns, ensuring that investors receive distributions before sponsors participate in profits.

The Challenges & Risks of Private Placements

While private placements offer clear advantages, they are not without important considerations. Transparency, experience, and strategy play critical roles in mitigating these potential downsides.

1. Illiquidity

Private placements are not traded on public exchanges, meaning your investment capital is tied up for the duration of the holding period – often 3–7 years. Avistone clearly outlines expected time horizons upfront, helping investors plan accordingly.

2. Accredited Investor Requirement

Due to regulatory restrictions, only accredited investors – those meeting certain income or net worth thresholds – can participate. This ensures investors have the financial resources to handle potential risk and lack of liquidity.

3. Limited Control

Investors are limited partners, with no decision-making authority over the asset. While this can be a benefit for those seeking passive income, it also requires deep trust in the sponsor’s expertise.

4. Market and Asset Risk

Like any real estate investment, private placements are subject to market fluctuations, vacancy risk, and operating expense variability. Avistone mitigates these risks through strategic acquisitions, conservative underwriting, and proactive property management.

5. Complexity and Due Diligence

Understanding offering documents, legal structures, and tax implications can be complex. That’s why Avistone provides clear, transparent offering materials, and is available to walk investors through the process.

Why Investors Choose Avistone for Private Placements

Investing in commercial real estate via private placements can be rewarding when done with the right partner. Avistone stands out for several key reasons:

  • Specialized Expertise: We’ve built deep operational and acquisition knowledge in a niche that performs – multi-tenant flex and shallow bay industrial real estate.
  • Proven Track Record: With millions in real estate acquired, managed, and sold, our disciplined strategy has delivered consistent returns across economic cycles.
  • Investor-Centered Communication: We prioritize transparency, with regular performance reports, financials, and direct access to our investor relations team.
  • Aligned Incentives: We invest alongside our clients, and our compensation is performance-based – motivated by your success.

Final Thoughts: Is Private Placement Real Estate Right for You?

If you’re an accredited investor looking for hands-off access to high-quality commercial real estate, private placements may be an excellent fit. They offer unique access to direct property ownership, cash flow, tax benefits, and long-term wealth-building potential.

And with a partner like Avistone, you can trust that each offering is backed by rigorous due diligence, expert management, and a commitment to delivering value.

Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Any such offer or solicitation will be made only by means of a private placement memorandum to qualified investors. All investments carry risk, including the risk of loss of capital.