Can R2CROWD Blast Open Access to Real Estate Capital?
JLL’s Amar Nijjar and Chad Gemmell just launched R2CROWD, Canada’s first national real estate crowdfunding portal run by industry pros. They tell Bisnow the platform will democratize investment here.
We snapped the guys at Modus, where Amar, left, explained how their new venture, Real Crowd Capital Inc (R2CROWD), enables regular Joes to invest directly in specific properties, ranging from office and industrial to retail and multifamily. “It’s sponsor-agnostic and completely independent,” he says, noting R2CROWD—a division of Waverly Corp, an exempt market dealer in B.C., Alberta, Ontario and Quebec—serves as an intermediary, with no ownership interest or developer ties. Deals are open to the masses, but also to accredited and high-net-worth investors, family offices and small to large institutions.
Brockville Shopping Centre, set for redevelopment, an R2CROWD investment. Amar and Chad formed a strategic partnership with JLL Canada, whose debt capital markets platform they'll continue to run. The alliance lets JLL dip a toe into crowdfunding and extend its capital markets service to retail investors and sponsors seeking to raise project-specific funds. “It’s a complement to what we were doing before,” says Amar. “Except now we’re not just arranging senior debt, we’re topping up the capital stack with the sub-debt and equity pieces.” They can access institutions, and more importantly, “millions of individual Canadians."
A Vancouver multifamily project, another R2CROWD investment property. Amar and Chad hatched the idea last year on a flight to a Calgary real estate conference, where they discussed industries disrupted by peer-to-peer technology, like Uber and the taxicab industry (the disruption was on full display yesterday) or Airbnb and the hotel industry. If these traditional businesses can be shaken up, with tech doing things better and making opportunities accessible to all, why not Canadian real estate? (Crowdfunding has taken off in the US.)
Here’s a shot of the R2CROWD and JLL teams with astronaut Chris Hadfield. In the past, Amar notes, capital resided with “old school investors”—high-net-worth private investors or sponsors. But wealth is being transferred to tech-savvy younger generations (X, Y and Millennials). “We’re looking at where are things going to be in the next five to 10 years,” he says. “The idea is to use the tech platform to showcase the deal, and push it to everybody, to democratize access for guys like you and me.” Even those with just $5k can get a long-term stake in a property on offer via R2CROWD.
Sandalwood Plaza in Brampton, another R2CROWD investment. The platform gives sponsors access to a wider pool of investors at a lower cost of capital. And with, say, $5M to spend, R2CROWD investors can spread it around to several different projects through the portal. Real estate crowdfunding's gained momentum in the US, but it's still a new concept here. Amar and Chad expect competition, but they know it’s taken them 15 months to get to this point, with many regulatory, legal and tech hurdles. “There’ll be copycats,” says Amar, “but they’ll be playing catch-up."