The year was 2014–and online Commercial Real Estate (CRE) fundraising was in its infancy. Windmill Investments Founder and CEO Dan Carter and CrowdStreet VP and Co-Founder Darren Powderly became acquainted during the timeframe when Powderly and his team were preparing for CrowdStreet’s launch.
“We started looking at online fundraising platforms as we felt it is going to be significant for the future of the industry of commercial real estate funding. Similar to Amazon in 1994 and the eCommerce industry, we expect exponential growth for CrowdStreet and the industry. Trust and transparency are essential and CrowdStreet’s advanced technology allows 24/7 access for investors and facilitates communication.”
Carter, whose company has a history of delivering double-digit returns and performing beyond projections, was intrigued by the evolving platform. When Windmill sought to raise funds for Timber Oaks, a 180-unit Class A multi-family apartment complex in the Dallas, TX, area, the stars aligned.Timber Oaks became one of the first listings on CrowdStreet’s newly launched investor marketplace.
The equity amount of the offering was $3MM with 43% of the total equity represented by CrowdStreet investors. The Targeted Investment Period was set for five years, with full payout in 2020.
Repeat Sponsors & Repeat Investors
Trouncing its goal for return-on-investment, Timber Oaks sold in under three years–with investors pocketing $1.8MM in profit. The project is also notable as being CrowdStreet’s first fully invested and realized offering.
Due to the success of equity raise for Timber Oaks, Windmill has partnered on three subsequent offerings with CrowdStreet to-date, adding 80 new investors to Windmill’s ranks.
“CrowdStreet investors have invested in at least two of our four offerings on the platform,” stated Julien Collin, Investment Analyst/Investor Relations Manager at Windmill. “Raising capital through CrowdStreet increases our opportunity to purchase bigger properties and increase our investment size. We reach out to our existing investor group, then CrowdStreet fills the gap.”
Creating Deeper Investor-Sponsor Relationships
The offering bore earmarks of what Timber Oaks investor Michael George calls an “outstanding commitment” between Windmill and its investors–in this case, aided further by CrowdStreet’s platform and facilitation processes. “Communication between Windmill and its clients has always been top-notch, but CrowdStreet took it to the next level.”
One example was the introductory webinar for Timber Oaks hosted by CrowdStreet. “I’d invested in multiple deals with Windmill. Still, it’s a benefit to hear the people managing the deal answer questions directly. It’s greater insight into how savvy they are,” said George.
Collin agrees, adding, “With CrowdStreet as a third-party, investors feel empowered to ask questions they might not ask us. They also know CrowdStreet will select qualified Sponsors, which creates an environment of trust.”
Besides winning with Timber Oaks, another early CrowdStreet adopter (and investor in CrowdStreet, Inc.), James Knapp, has invested in a total of 14 CrowdStreet offerings. Still, it’s the relationship factor that made Windmill stand out. “I got the sense that Dan Carter was more worried about the investors than about himself,” Knapp commented.
In addition to posting offerings on the CrowdStreet marketplace, Windmill also uses the white-label CrowdStreet Connect investment software to power its own investor portal. Collin cites the time savings and ease of use in managing his current roster of 370 investors via emails personalized to all contacts, plus the ability for investors to access documents on-demand, 24/7.
Founded in 2004, Windmill Investments is a private real estate investment company specializing in identifying undervalued or under-performing properties with strong growth potential, including single-family homes, multifamily apartment complexes, and commercial offices. The company has over 1,500 units under its management portfolio.
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This graph shows possible returns based on index data from three sources - future returns will be different. CrowdStreet does not guarantee returns. "Bonds" returns are based on historical annual returns of the Bloomberg Barclays US Aggregate Bond, "S&P 500" returns are based on historical annual returns of the Standard & Poor's 500. "CRE Index" returns are based on historical annual returns of the "NCREIF Property Index."
Prudent investment strategies almost always involve a component of diversification. Failure to diversify an investment portfolio properly across a range of asset classes generally results in an increased risk of the loss of capital. Typical investment portfolios for individual investors contain only a small allocation to commercial real estate (“CRE”) holdings as an asset class, as well as a limited inclusion of private placements and/or illiquid securities. The opportunities offered on the CrowdStreet Marketplace are generally both CRE and illiquid private placements, and as such are often double restricted in prudent asset allocations. Further, the opportunities on the Marketplace typically represent a specific subset of CRE opportunities available to investors when compared to the real estate asset class as a whole. Therefore, no investor should rely on CrowdStreet Advisors Private Managed Accounts as the sole, or even majority, of their overall investment portfolio. Rather, investors should rely on CrowdStreet Advisors Private Managed Accounts as a component of a broadly diversified portfolio that includes other asset classes and liquid securities not currently available through CrowdStreet Advisors.