AUSTIN, Texas, September 27, 2023 – CrowdStreet, Inc. ("CrowdStreet"), an award-winning online real estate investing platform, today released its updated Investment Thesis.
The Thesis outlines CrowdStreet’s investment strategy and philosophy amid a commercial real estate (“CRE”) investing landscape defined by interest rates that have risen rapidly. In accordance with the Federal Reserve’s “higher for longer”2 rate environment outlook, CrowdStreet will seek deals that:
- Prioritize principal protection
- Capture current lending opportunities associated with high interest rates
- Offer preferred equity positions rather than common equity, where prudent
- Sustainably service their debt
- Place a higher value on what’s present in a deal today given today’s market conditions, over what may be possible down the road
- Have appropriate discounts relative to peak market values
- Aim to exceed the risk-free treasury rate for common equity positions
“Due to the high degree of market uncertainty in the next twelve months, we plan to take a more conservative approach on short-term assumptions,” said CrowdStreet Chief Investment Officer Ian Formigle. “I continue to believe we are in a period of mispriced opportunities, but market volatility has called for added scrutiny.”
The Thesis outlines the general structure for opportunities that CrowdStreet will seek, including:
- Debt Investing: In an environment where non-bank lenders are on the rise, seeking debt opportunities aligns with CrowdStreet’s focus on capital preservation.
- Preferred Equity Investing: Seeking to add possible downside protection for certain deals by opting into preferred equity tranches.
- Common Equity Investing: Despite the headwinds, there are select opportunities in which projects may be appropriately discounted from their peak prices.
“By employing creative measures and pursuing investment opportunities across the real estate capital stack, CrowdStreet will provide investors with access to deals that we believe align with the current economic conditions,” Formigle said. “In addition to the longstanding relationships with high-quality sponsors that have long been a hallmark of investing with CrowdStreet, we intend to bring deals with risk profiles appropriate for today’s market.”
“We expect to see additional attractive investment opportunities emerge in the months ahead,” said CrowdStreet interim CEO Jack Chandler. “As markets begin to clear and the Fed’s rate hike campaign subsides, we expect sponsors will re-enter the market with vigor and deal volume is likely to rise.”
To review the full Thesis, please visit: https://www.crowdstreet.com/investment-thesis/
1 As reported by Dr. Adam Gower in Best Real Estate Syndication Platforms | Gower Crowd – UNLEASHED, published 2022, based on dollars raised by individual investors
2 “Fed Officials Reiterate “Higher for Longer” Mantra.” Investopedia, www.investopedia.com/fed-officials-reiterate-higher-for-longer-mantra-7973747. Accessed 26 Sept. 2023.
CrowdStreet, the nation's largest online private real estate investing platform1, provides investors direct access to a range of investment opportunities, offering the ability to invest with ease and convenience. Real estate firms benefit from a highly efficient way to connect with investors to raise capital and manage investor relations. CrowdStreet is creating a community where investors and experienced real estate firms can work together to expand participation in the commercial real estate market to help build and preserve wealth. Learn more at https://www.crowdstreet.com/.
CrowdStreet, Inc. (“CrowdStreet”) offers investment opportunities and financial services on its website. Broker dealer services provided in connection with an investment are offered through CrowdStreet Capital LLC (“CrowdStreet Capital”), a registered broker dealer, Member FINRA/SIPC. CrowdStreet and its affiliates do not endorse any of the opportunities that appear on its website. Investment opportunities available through CrowdStreet are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. Private placements are illiquid investments, in that they cannot be easily sold or exchanged for cash, and are intended for investors who do not need a liquid investment.
This communication is for informational purposes only and should not be regarded as a recommendation, an offer to sell securities, or a solicitation of an offer to buy any investment products, financial products, or services.