Most real estate sponsors still skip SEC advertising rule, study finds

A new working paper on 1,180 U.S. real estate offerings finds that only about one in 10 used Rule 506(c), even though the SEC rule has allowed public advertising since 2013. The study also found that advertised raises above $10 million reported more investors, a pattern the author says sponsors should examine.

Why it matters: - Rule 506(c) gives real estate sponsors a rare path to advertise private offerings publicly, as long as every buyer is a verified accredited investor. - The study suggests most sponsors are not using that option, even though larger raises may benefit from broader visibility. - For sponsors raising more than $10 million, the findings point to a potential link between advertising and investor count.

What happened: - Web Worx Labs published a working paper on how U.S. real estate sponsors use Rule 506(c) of Regulation D. - The paper covers 1,180 offerings filed by 679 U.S. real estate sponsors from July 2025 to June 2026. - The study is free to read on SSRN. - It combines SEC Form D filings with a hand review of sponsor websites and public ad libraries.

The details: - The 679 sponsors sought $27.9 billion across the 1,180 offerings. - Sponsors reported $3.3 billion sold, or about 12 cents for every dollar sought. - The median offering was $1.9 million from 13 investors. - Fifty-five percent of offerings reported nothing sold. - About one in 10 raises used Rule 506(c). - Among the 88 largest sponsors selling to the open market, 27 advertised on LinkedIn, Google or Meta, while 61 did not. - On raises below $10 million, advertised offerings reported a median of 46 investors, versus 53 for non-advertised offerings. - Between $10 million and $30 million, advertised offerings reported 81 investors, versus 48 for non-advertised offerings. - Between $30 million and $100 million, advertised offerings reported 137 investors, versus 60 for non-advertised offerings. - The paper says these figures show associations, not proof that advertising caused the difference. - A review of sponsor websites found that only 4 of 95 offered all five investor intake features examined by the study. - The study says a plain-language summary with charts is available on the Web Worx Labs website.

Between the lines: - The gap between what Rule 506(c) allows and what sponsors actually do suggests the rule may be underused in real estate fundraising. - The sponsor website review points to weak digital intake practices across much of the market. - The investor-count pattern grows stronger in larger raises, which may matter most for sponsors trying to scale capital formation.

What's next: - Usman Sheikh said sponsors raising more than $10 million should look at the pattern. - The paper may push more real estate sponsors to test whether advertising improves investor reach, while still meeting accredited investor verification rules. - Further research would be needed to determine whether advertising itself drives the higher investor counts.