As CRE Lending Digitizes, Investors And Developers Bring Big Projects Online
A number of CRE processes are now digitizing, some leading to modest increases in efficiency, others revolutionizing entire sectors. Online marketplaces that connect lenders and developers fall into the latter category. Crowdfunding is no longer just for startups, and the concept is gaining recognition as a viable financing vehicle for late-stage and mature companies on both ends of the deal. The leading platform, RealtyShares, raised $11.9M of debt financing for the acquisition and recapitalization of a 10-property student housing portfolio in June.
Rather than approach lending institutions individually, which can be a time-consuming endeavor, online lending platforms streamline the process, connecting commercial sponsors with a fast and flexible funding option.
RealtyShares is extremely selective in the developers it supports, partnering with those that have a demonstrated track record of success. The company's institutional-caliber underwriting includes a review of investment strategy, financials, legal standing and property condition and location, which can be an asset for sponsors and investors.
For CRE investors, RealtyShares offers more control and opportunity for diversification than a REIT, private equity real estate or stock in a full-service real estate company, as investors handpick from a curated selection of projects. RealtyShares offers a full capital stack, providing debt and equity financing, which makes it a more attractive option for institutional lenders and seasoned, sophisticated investors.
RealtyShares' barrier to entry for investors is relatively high for an online marketplace, with a $5K minimum. This helps ensure investors are serious and more deeply committed than those engaging with competitors.
RealtyShares is setting the bar high for the industry, deploying more than $500M into nearly 1,000 real estate projects in 39 states. Its model and growth have enticed some top talent from big-name companies and more than 120,000 institutional and individual investors.
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