Q&A With Clint Roberts, Chairman Of New Multifamily Equity Exchange Platform
A soon-to-be-launched platform looks to exchange multifamily property information between real estate investors and brokers.
U.S. Apartment Equity Exchange Inc. is a specialized marketplace aiming to allow for more specific search options than other platforms, and promising confidentiality of property information.
River Oaks Equity Partners founder and Managing Partner Clint Roberts will serve as chairman of the board of directors for the USAEX. Roberts conducted a Q&A with Bisnow to explain the USAEX platform in-depth.
Bisnow: What is the U.S. Apartment Equity Exchange Inc., and why was it created?
Roberts: The U.S. Apartment Equity Exchange is an online marketplace that was built to specialize in multifamily investment sales. The website hosts information of listed multifamily properties in a way that is superior to other platforms. To be clear, the site does not function as a brokerage platform and it is not limited to one brokerage company.
In fact, every brokerage company in the country is welcome to participate. We wanted to really reimagine how a platform could function as an intermediary of information to add meaningful value to both investors and brokerage professionals.
Bisnow: Who will this platform impact?
Roberts: The multifamily investment sales industry will be the biggest winner. It will truly be a win-win for both investors and brokerage professionals. Underwriting standards are very uniform with institutional offerings, but underwriting standards are very fragmented in the Class-B and Class-C property space. This is especially true with deals priced under $10M. We’re attempting to standardize underwriting while providing some degree of flexibility for nuances at properties. That is where GAUGE comes into play.
GAUGE stands for Generally Accepted Underwriting Guidelines Endorsement, and its purpose is to produce more standardized reporting of financial operating results for multifamily properties. Investors are going to have greater control of underwriting deals using their own assumptions, and their efficiency evaluating offerings is going to increase exponentially with USAEX’s functionality for users. Those benefits are going to be a direct result of the advanced underwriting model that is been built into the platform.
Brokerage professionals, on the other hand, will be fielding more qualified inquiries. I know as a broker I would rather be working 100 qualified leads than scavenging through 1,000 tire-kickers.
Bisnow: How does the platform work?
Roberts: Brokerage professionals from across the country will be able to list their active multifamily listings on USAEX. Listing properties will be free for brokers because we are aiming for a high volume of inventory. After executing a confidentiality agreement, investors will have access to the full offering detail page. The first five listings they select to view full details for will be free of charge. After viewing the full details of five listings, the monthly subscription is $9.95 per month. No long-term agreements — everything will be month to month.
Bisnow: What measures were taken to ensure privacy on the platform?
Roberts: Both property owners and brokerage professionals are rightly concerned about sensitive information being in the public domain. After an investor searches for properties, a menu of properties matching that criteria will come up, but there will essentially be a curtain in front of the listing.
This curtain blocks the name, any information that could identify the property and even covers up the lead picture for the property. Investors must digitally sign a confidentiality agreement providing their name and contact information, and certify that their interest is solely as a principal investor. Confidentiality is a top concern for USAEX.
Bisnow: How is this platform different from other CRE platforms?
Roberts: Specializing exclusively in multifamily properties allowed the developers to create coding that really amplified the user experience from an investor’s perspective. For the first time, investors will be able to adjust real estate taxes and/or controllable expenses to the current net operating income and then search by advanced metrics such as a trailing 12-month, trailing six-month, trailing three-month or trailing one-month cap rate.
Other sites simply have one field that says cap rate, but I always ask myself which one? Most assume the trailing 12 but agency lenders are underwriting to the lower of the T3 or T1. If the ones responsible for underwriting debt are looking at the financials in a certain way, why shouldn’t the average investor?
The advanced underwriting model will also allow investors to carry over their modeling assumptions to the pro forma and search by cash-on-cash returns. This simply isn’t available on other platforms.
Bisnow: How does your experience in real estate help you influence the direction of this platform?
Roberts: The goal was to create the best platform out there and, no doubt, leveraging my experience helped the final product. Real-world brokerage experience enabled me to help developers address the functional shortcomings of competing sites.
I’ll give you an example: I was speaking with an executive of a competitor site, and he thought the requirement of executing a confidentiality agreement was absolutely nuts. I just thought to myself, "You just don’t get it." This executive was looking at the site from a traditional e-commerce perspective where production usually is the result of getting the most eyeballs to look at something.
But that is not at all what true brokerage professionals want with inventory we are responsible for. In this business, marketing efforts must always be tied to discretion and confidentiality. We only want qualified eyes looking at our listings and we want to know exactly who is looking at the listing.
Bisnow: What are the initial goals for the platform this year?
Roberts: We want to have a large inventory of quality listings by the end of the first operating year, and that will be a priority. Well-qualified investors will follow high-quality inventory and more investors, in turn, will spur more brokerage professionals to put their best listings on the U.S. Apartment Equity Exchange. Big picture, we want USAEX to be the preeminent information exchange platform for small and mid-market multifamily investment sales.