Commercial Investment Real Estate

MAR-APR 2015

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

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34 March | April | 2015 Commercial Investment Real Estate tions, though we have also featured several funds that perform very well. Darren Powderly, CCIM: CrowdStreet posts institutional-quality commercial real estate investments in a single asset or fund of ering structured either as debt or equity. We're comfortable helping our sponsors raise $500,000 to $2 million from our accredited investor membership base. T e property values range from $2 million to $200 million, yet are typically under $20 million. Where do you fi nd the deals? Braman: Generally speaking, qualif ed sponsors f nd us through our marketing ef orts and press. Sponsors and borrowers come to our site and complete a form to see if they have a qualif ed project. We immediately schedule a call with one of our acquisition professionals to determine if we want to invest in, or lend on, a transaction. Hooper: We source our deals from a mix of our experi- ence and relationships in the industry. Combined, our real estate team and founders have more than 65 years of real estate experience and more than $5 billion of transaction experience. We also receive referrals from groups we've done business with and from inbound interest. Powderly: Sponsors are f nding us online. We have an excellent online presence, which we extend to our sponsor clients to help them build their online brands. Today we are f elding eight to 10 inquiries per week from real estate spon- sors. We're also communicating with institutional-quality sponsors on a regular basis to help them understand how to raise capital online via our marketplace. T ere are a lot of moving parts from a regulatory, technology, marketing, real estate, f nance, partner, and investor relations points of view, so we go to great lengths to make sure our sponsors are prepared prior to posting an investment on our marketplace. What are your company's parameters for putting a property or deal up for crowdfunding? Braman: Realty Mogul has internal guidelines that we use, but really it comes down to sponsorship and the risk/return of the investment. We look for sponsors and borrowers who have already shown that they have the ability to execute on a plan and have expertise in their asset class. From there we look at the property, the market, and the plan for reaching the return in the estimated hold period. If we feel like it is a deal we can support, we discuss it at a credit committee and collectively decide whether to proceed with f nalizing a full underwriting and making the of ering available to our investors. Hooper: Our focus is on the real estate operating companies and their track records, experience, and what they have done to show that they put their investors f rst. In contrast to most real estate crowd- funding companies, we are not building a real estate investment com- pany. Rather, our focus is providing best-in-class real estate operating companies with a technology platform that gives them the tools to raise capital in this new environment. As such, we do not provide investment advice or recommendations on which assets to invest in, but we do provide investors with direct access to partners with the best real estate companies in the U.S. Powderly: CrowdStreet posts institutional-quality commercial real estate with def ned business plans from reputable and proven sponsors. As a CCIM-founded company with deep expertise in the investment real estate market, we know how to evaluate sponsors and deals prior to posting them on the marketplace. CrowdStreet intro- duces individual investors to high-quality sponsors in a transparent, secure online setting where they can access all the information they need to make an informed investment decision. If they have a ques- tion, they are welcome to contact us via chat, email, or phone, and we will help them get the answers they need prior to investing. What's the average timeframe for crowdfunding real estate deals? Braman: It really depends upon the crowd. We have more than 15,000 investors, so things go more quickly on the Realty Mogul platform. We close our loans in 10 to 15 days on average. For equity, if it is a strong deal, we have raised funds in a week or less, although we set reasonable expectations of 30 days from start to f nish. Usu- ally we are waiting on the sponsor's conventional loan to be under- written and f nalized to close. Hooper: We've seen deals literally fund in a few days and we've had funds that have raised $3-plus million over the course of a month and a half. THE FUTURE OF COMMERCIAL REAL ESTATE CAPITAL RAISING IS ONLINE.

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