Exclusive: RealtyShares To Fund Over $300M In Commercial Debt Next Year
San Francisco-based real estate crowdfunding company RealtyShares has expanded into a new area of real estate financing for the firm. The company stepped into commercial debt financing earlier this year with the hiring of VP of commercial debt originations Bill Lanting and could fund over $300M in commercial debt next year. RealtyShares also secured $100M in funding to allow the company to enter the bridge lending space.
Bisnow spoke with Bill Lanting about the new commercial debt division and how the company is leveraging crowdsourced funding and institutional investment to create new financing opportunities.
“RealtyShares is successful in identifying investors in crowdfunding for real estate investment in debt and equity,” Bill said. “Sponsors are coming to the door in droves looking for funding. We’ve been successful in originating these sorts of opportunities.”
Bill told us the commercial debt program offers three different financing options. The first one is small balance lending for multifamily, particularly those falling under Fannie Mae or Freddie Mac. He expects funding for small multifamily properties to reach about $10M each month next year totaling upwards of $120M for the entire year. This program is a partnership with CBRE.
The second program offers financing for triple-net leased properties, which Bill said is a unique niche. He said this product will be available to someone wanting to build a franchise or standalone shopping center with triple-net leases. The funding will help finance construction of that product through a short-term loan.
He said developers can turn around and sell these properties very quickly since there is a lot of demand for long-term triple-net leased properties. Bill expects to fund $80M to $100M in triple-net lease loans next year.
The most unique aspect of the program is the ability to fund $2M to $10M in bridge loans to sponsors and borrowers. The loans span 12 months to 24 months with interest rates in the 8% to 10% range. Instead of relying solely on crowdfunding deals, RealtyShares secured a solid foundation of institutional investment.
“What we offer allows an individual investor to work side-by-side with major institutional investors with institutional quality real estate deals whether that’s debt or equity,” Bill said.
This partnership will allow small investors to fund Class-A office or a large shopping center. Bill expects $100M to upwards of $200M in this kind of financing for next year.
He said not everything will be fair game and will focus on the four main food groups of commercial real estate: industrial, retail, office and multifamily. He’s not interested in hotels or senior housing, since those add a level of risk to which Bill doesn’t want to expose investors.
RealtyShares has set up a well-constructed machine, Bill said, allowing for the company to fund any of these transactions within 30 days, and a bridge loan within two weeks. He says he knows what institutional capital wants, knows what will close and has third-party providers for appraisals and environmental surveys at the ready.
Earlier this year, RealtyShares reached $200M in funding spanning 400 investment opportunities on the crowdfunding platform.