First and foremost, I hope you and your loved ones are healthy and safe.
We’re in an unprecedented situation that none of us could have foreseen, and I want to reassure you that CrowdStreet is fully committed to providing you with ongoing updates on your current investments and the state of the market in general. Also, with every potential new deal, we’re being incredibly selective and are looking for investments that still make sense in this current economic situation.
Two weeks ago, the CrowdStreet organization began operating remotely. Thanks to our business continuity plan, we were able to smoothly transition. And although there is no “business as usual” these days, I want to assure you that we will continue to provide our community of investors and sponsors with the highest level of service.
For every funded project, we’ve communicated with the sponsor and requested that they reach out to investors to share how COVID-19 may have affected their business plans, including any actions they had already taken to mitigate the impact. So far, we’ve seen over 150 pandemic-related direct communications sent by our sponsors and expect more to follow.
We also asked sponsors to increase the cadence of their updates, moving from quarterly to at least monthly. In that request, we recommended they address the following topics:
- Business continuity plans
- Business Plan/Projections
- Asset-specific considerations
Now that most of our sponsors have shared their initial plans, our Asset Performance team is working to get detailed information about your active investments. First, our team is evaluating almost 400 closed projects to get better insights into the level of exposure and risk at the portfolio level. They are also working with each of the sponsors to get individual asset-level information to better understand how they may perform in the coming months. We intend to share both the portfolio and asset-level information, as well as any other relevant information regarding your investments, as soon as practicable.
All of that data contributes to our Investments team’s review of new deals for the CrowdStreet Marketplace too. They have reviewed the entire new deal pipeline and removed any deals that no longer stand up to post-COVID-19 underwriting assumptions.
As Ian Formigle, our Chief Investment Officer, said in our special livestream two weeks ago, “The deals have to have different assumptions than they did a month ago.” The Investments team is now looking for deals that are repricing, or where the sponsor was able to take advantage of favorable debt terms and secure financing. They’re also conducting new stress tests for years one and two and are asking sponsors for updates on how their business plans have changed. They’re also putting even more emphasis on the sponsor’s track record–looking for tenured and enterprise sponsors, as well as sponsors that demonstrate strong balance sheets.
In addition to the live stream, our teams will be producing more informational content in the coming weeks as the situation evolves to help you stay informed.
And finally, if you are interested in helping those most affected, our team has pulled together a list of well-respected charities (international, national, and local) that can have a significant impact on people’s lives. Please consider giving to one of these organizations or another group in your community.
Tore C. Steen | CEO, CrowdStreet