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Financial advisers often push clients to invest in real estate investment trusts with high fees and surprise costs, burdening many investors with paper-thin wallets and mounting debt. That way of doing business could soon change, if Los Angeles-based real estate investment firm stREITwise has anything to say about it.
The company, which has raised over $20M so far and recently made a 10% annualized dividend distribution, offers full access to institutional-quality real estate for a lower cost. By allowing investors to buy shares of its REITs directly online, which minimizes costs and maximizes gains, stREITwise cuts out broker commissions and passes the savings on to the investor.
Upfront expenses are capped at 3%, as opposed to 10% to 15% for other REITs, with an ongoing 2% asset management fee. The company does not charge any acquisition, disposition, financing or incentive fees. It buys the real estate, collects the rent and passes on a dividend to the investor each quarter.
The company’s three founders are experienced real estate investors, having collectively underwritten or managed real estate investments valued in excess of $5.4B spanning all major asset classes throughout the U.S.
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“Non-traded REITs have gotten away with charging crazy fees for too long,” stREITwise CEO Jeffrey Karsh said. “By cutting out the broker commission and accepting investors on our website, we’re changing the game. Investors can finally have their cake and eat it too.”
In September, stREITwise announced a Regulation A+ IPO giving both accredited and nonaccredited investors the opportunity to invest in the firm's first REIT offering, 1st stREIT Office.
The company acquired Panera Bread Co.'s HQ in Sunset Hills, Missouri, through 1st stREIT Office earlier this month. The property also houses tenants like New Balance, Wells Fargo and AMN Healthcare. The proceeds from this offering will be used to buy more office buildings in the future to create a portfolio of stabilized, institutional-quality office buildings.
“Until recently, private market real estate investments were only available to a small population,” Karsh said. “And even those who were able to get in would often have to pay high fees. Those days are over.”
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An offering statement regarding this offering has been filed with the U.S. Securities and Exchange Commission. The SEC has qualified that offering statement, which means that 1st stREIT Office may make sales of the securities described by that offering statement. It does not mean that the SEC has approved, passed upon the merits or passed upon the accuracy or completeness of the information in the offering statement. You may obtain a copy of the offering circular that is part of that offering statement here. You should read the offering circular before making any investment.
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