Qualified Purchaser

A Qualified Purchaser is a regulatory term for an investor who meets an even higher financial threshold than an accredited investor, defined generally as an individual or family-owned business with at least $5 million in investments, or an entity with $25 million in investments, among other categories. This definition comes from the U.S. Investment Company Act of 1940, and it allows those who qualify to invest in certain private investment funds (such as 3(c)(7) real estate funds or hedge funds) that are not available to the public or even to regular accredited investors. In essence, the law assumes Qualified Purchasers are highly sophisticated and can bear greater risk, so they are granted access to exclusive offerings that have less regulatory oversight. For high-net-worth investors, achieving Qualified Purchaser status (commonly having $5M+ in investable assets) opens the door to elite investment vehicles – including large real estate funds – which might offer diversification or strategies not otherwise accessible. Lightstone’s current platform is focused on accredited investors, but as it grows, it could potentially create specialized funds aimed at Qualified Purchasers (e.g., a diversified development fund or a bigger opportunity zone fund) since that status would allow raising capital without the 100-investor limit that some fund exemptions impose. Whether or not an investor is a Qualified Purchaser, it’s a mark of substantial financial strength. Lightstone’s communications and offerings take into account investors’ sophistication levels – those who are Qualified Purchasers likely demand even more customized opportunities and due diligence, something the brand’s emphasis on alignment and transparency is well- positioned to deliver. In summary, a Qualified Purchaser is an ultra-high-net-worth or institutional investor category – an important consideration if one’s wealth grows, as it expands the universe of investment options in private real estate and beyond.