Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Thursday, 16 January 2020

Crowdfunding Starts Gaining Ground in Commercial Real Estate

Initially, crowdfunding, the process of raising capital via the Internet, was used to raise preferred equity and debt. Now, platforms are broadening their offerings to include other pieces of a property's capital stack.

Commercial Real Estate Direct Staff Report

Crowdfunding, the process of raising capital from a large number of people via the Internet, is finally starting to gain traction in the commercial real estate world.

The most-active platforms say they've been able to substantially increase the amount of capital they've raised for properties and have successfully opened the sector to thousands of investors, mostly accredited, who otherwise wouldn't be able to invest.

Some platforms, namely FundRise and Realty Mogul, have even pursued non-accredited investors through non-traded REITs they've launched.

Realty Mogul, which launched its platform roughly five years ago, has 180,000 registered users on its platform and 20,000 of those have invested in the Los Angeles company's offerings. And CrowdStreet, which was founded around the same time, was able to fully fund a $25 million offering on its site within four hours.

FundRise, meanwhile, has participated in 281 properties valued at $3.9 billion. The Washington, D.C., company had raised a total of $856 million, including $422 million on behalf of its seven eREITs as of the end of 2018. The company also raised capital that was used to invest in 3 World Trade Center, a 2.5 million-square-foot office building in lower Manhattan.

Crowdfunding was facilitated by the Jumpstart Our Business Startups, or JOBS, Act of 2012, which allowed sponsors to raise capital in small increments from the public. Soon after, dozens of entrepreneurs launched efforts to offer investments in commercial real estate, both equity and debt. What initially was viewed as a modernization of the old syndication model morphed into something broader.

It couldn't come at a better time. Even investment managers, which traditionally have raised capital solely from institutional investors to fill their commercial real estate allocations, have started eying ways of getting in front of retail investors. Blackstone Group, Starwood Capital Group and Oaktree Capital Management each have launched efforts to reach retail investors, which they view as a relatively untouched capital...





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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