Commercial real estate crowdfunding marketplace and software provider CrowdStreet is reporting record funding growth following a series of highly-successful investment offerings in June and July 2016. These latest numbers underscore the company’s reported strong quarter-over-quarter growth in both total marketplace funding and in the licensing of CrowdStreet’s white-label online fundraising and investor management solution, Sponsor Direct.
CEO and co-founder Tore Steen highlighted CrowdStreet’s unique position within commercial real estate capital markets:
“CrowdStreet is unique in the commercial real estate investment space. While our competitors are positioning themselves as online versions of institutional funding, we’re the only major provider delivering a comprehensive online funding and investor management solution. The CrowdStreet Platform extends beyond the fundraising of a deal to cultivating and growing lifetime value for the sponsor through building, managing and expanding ongoing investor relationships.”
CrowdStreet’s Marketplace launched in April 2014 and was one of the first direct-to-investor marketplaces, connecting developers and operators directly with investors rather than simply pooling investors through a special purpose vehicle such as an LLC (which obscures investor identity from sponsorsIn commercial real estate, the sponsor is an individual or company in charge of finding, acquiring and managing the real estate property on behalf of the partnership. The sponsor is usually expected to invest anywhere from 5-20% of the total required equity capital. They are then responsible for raising the remaining funds and acquiring and managing the investment property’s day-to-day... More). The company quickly differentiated itself by focusing exclusively on commercial real estate investments and by the strength of its backend investor relationship management software.
An updated version of this backend software was released in mid-2015 as CrowdStreet Sponsor Direct, a white-label fundraising and investor management solution enabling sponsors to easily build and launch their own branded fundraising platform integrated into their existing websites. As of July 2016, CrowdStreet has successfully posted over $1.7 billion in CRE projects via 60 offerings on its Marketplace with an additional 47 sponsors using Sponsor Direct to manage over $400 million in investor funds directly from their own websites and their own investor networks.
June and July 2016 saw an acceleration of this growth with several significant investment offerings clearing the Marketplace, including:
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CoreCore commercial real estate investments are the least risky offering. They are often fully leased to quality tenets, have stabilized returns and require little to no major renovations. These properties are often in highly desirable locations in major markets and have long term leases in place with high credit tenants. These buildings are well-kept and require little to no improvements... More Properties West – Chameleon Apartments: a Seattle metro multifamily offering that was oversubscribed less than 24 hours after launch, in total securing more than $2.3 million in offers from 36 investors.
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Arrowpoint Properties – River’s Edge: a Boston metro multifamily offering that went from going live on the Marketplace to $2.9 million in offers and 37 new investors in just eight days. An institutional private equity real estate fund provided one-third of the total raise, combining professionally managed capital with high-net-worth capital.
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Intellistay Hospitality – Lima: an Ohio hospitality offering that secured a total of $3.5 million in funding from 110 new investors. IntelliStay is using CrowdStreet’s included investor relations solution to manage their significantly increased investor base, allowing them to avoid hiring additional staff.
- Virtua – High Growth Fund II: a nationwide value-addProperties are considered value-add when they have management or operational problems, require some physical improvements and/or suffer from capital constraints. By making physical improvements to the asset that will allow it to command higher rents – remodeling the kitchens in multi-family, installing more energy efficient heating systems in a medical office, etc. – improve the quality of tenants and increase... More real estate fund raised $3.5 million from 71 new investors. Virtua is also using CrowdStreet software to manage their enlarged investor network.
Asked if June and July’s performance was indicative of a larger trend for the company, Steen responded:
“CrowdStreet views our June and July 2016 performance as indicative of growing appreciation for the value provided by our unified fundraising and investor management solutions. While our competitors are selling one-time infusions of anonymous capital, we’re helping our sponsor customers build lasting businesses through the streamlined acquisition and management of individual and institutional investors at scale.”
