April 2019 – REI INK

CrowdStreet Surpasses $500 Million in Online Investments

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CrowdStreet, a Portland, Oregon-based technology provider with an online marketplace for direct equity investment in commercial real estate, crossed the $500 million threshold in total online investments in March. The news accompanies a record quarter in which CrowdStreet saw individuals invest more than $75 million in commercial real estate deals. Since April 2014, the company has seen more than $525 million invested in office, multifamily, hotel, retail and industrial deals on the CrowdStreet Marketplace. Investment highlights include one sponsor raising over $4 billion in offers in just over an hour and the inaugural fund of the CrowdStreet Blended Portfolio raising more than $9 million from 198 investors in two months. Investment performance has been notable as well: 12 realized offerings on CrowdStreet to date have generated a 31.7% average XIRR and 1.6x average realized equity multiple. “Crossing over the $500 million mark is a significant milestone that clearly demonstrates that online investing in commercial real estate is here to stay,” said Tore C. Steen, CEO of CrowdStreet. “Investors on CrowdStreet can now choose between directly investing in a variety of commercial real estate asset types, investing in a diversified portfolio of Marketplace assets by making one investment in the CrowdStreet Blended Portfolio, or getting personalized advice with our Private Managed Accounts service.” Through its Marketplace and software solutions, more than 112,000 investors, along with 275 commercial real estate operators and developers, are currently on the CrowdStreet platform. Sponsors who raised capital on the CrowdStreet Marketplace in the first quarter include Feldman Equities, KBS and Driftwood Hospitality. CrowdStreet was the winner of the 2019 Rising Star category in the annual Oregon Technology Awards.

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Millennium Trust Company has launched an API that is designed to allow investment sponsors and advisor systems to reduce processing times, control the user experience and increase transaction volumes. Millennium Trust is a provider of specialized retirement and institutional custody solutions. The new API enables investment platforms and advisor systems to integrate with Millennium Trust’s custody services. The API provides investment sponsors with the ability to allow their clients access to their investment products through Self-Directed IRAs. “This is a win-win for investment platforms and their clients,” said Tom Daley, managing director of custody services. “The investment platforms are able to control the user experience and tap into the multi-trillion dollar IRA market, while investors are able to have a simple, digital investing experience.” Investors will be able to open a Millennium Trust Self-Directed IRA on the investment platform. For investment sponsors, the Millennium Trust API will enable account opening and investment processes in one place.

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Title and escrow provider OS National has announced a $15 million headquarters expansion that will create more than 1,000 new jobs in Gwinnett County, Georgia. The company is based in Duluth. “In selecting Gwinnett County for our national headquarters, we believe we can support OS National’s explosive growth and strategic expansion efforts across the U.S.,” said Jamie Wunder, managing partner of OS National. “We recognize the county’s efforts providing businesses excellent options for growth and helping to grow a rich and diverse talent pool for the future.” OSN currently employs more than 500 associates in four states and helps provide title insurance and escrow services to institutional clients and national lending and banking institutions on both residential and commercial transactions.

More First Quarter Home Sales Data to Consider

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Last week REI INK shared data about U.S. average homeownership tenure and sales price gains from ATTOM Data Solutions’ first quarter U.S. Home Sales Report. This week, we’ll look at the report’s data on cash sales, institutional investor sales, distressed sales and FHA buyers share. All-Cash Sales Overall, first quarter cash sales in first quarter 2019 (28%) decreased slightly versus the first quarter of 2018 (28.9%), but it beat all-cash sales of the previous quarter (27.7%). Metro areas with more than 1 million in population that showed the highest share of all-cash sales were Miami (44.6%); Tampa-St. Petersburg, Florida (40.7%); Birmingham, Alabama (40.6%); Detroit (40.1%); and Memphis, Tennessee (38.9%). Institutional Investor Sales For the report, institutional investors are considered entities that buy at least 10 properties in a calendar year. Nationwide, institutional investor shares of single-family home and condos were down nationwide, but they were up 29% in local markets. In first quarter 2019, these shares were 1.8%, compared to 3.7% in the previous quarter and 2.2% from first quarter 2018. Among 49 metropolitan statistical areas with a population of at least 200,000 and at least 40 institutional investor sales in Q1 2019, those with the highest share of institutional investor sales in the first quarter were Columbia, South Carolina (7.9%); Atlanta, Georgia (7.4%); Charlotte, North Carolina (5.6%); Memphis, Tennessee (5.1%); and Las Vegas, Nevada (5%). Distressed Sales Bank-owned (REO) sales, third-party foreclosure auction sales, and short sales—all considered distressed sales—made up 14.2% of all single-family and condo sales in the first quarter of 2019. That’s an increase from the 12.9% seen in the previous quarter but down from 15.2 % in the first quarter of 2018. Of the 135 metropolitan statistical areas with a population of at least 200,000 and at least 100 total distressed sales in first quarter 2019, the highest share of total distressed sales were in Atlantic City, New Jersey (33.1%); Trenton, New Jersey (28%); Rockford, Illinois (27.3%); Peoria, Illinois (26.1%); and Shreveport, Louisiana (25.9%). Of the 135 metro areas, 24% saw year-over-year increases in share of distressed sales. Among those metro areas were San Antonio, Texas, with a 22.2% increase; Salt Lake City, Utah, up 20.6%;); New Orleans, Louisiana at an 11.8% increase; Indianapolis, Indiana, up 10.6%; and Raleigh, North Carolina, up 8.9%. FHA Buyers FHA buyers are typically first-time homebuyers or buyers making a low down payment. FHA buyers share was 10.9% of all U.S. single-family and condo sales in first quarter 2019. That’s a slight increase from 10.8% percent of all sales in the previous quarter but a decrease from 11.8% in first quarter 2018. The number marked the eighth consecutive quarter with annual decreases. Among metro areas with a population of at least 1 million, those with the highest share of sales to FHA buyers were Indianapolis, Indiana (18.5%); Riverside, California (18%); Houston, Texas (17.3%); Providence, Rhode Island (16.2%); and Hartford, Connecticut (16.2%).

by Robert Rakowski
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Shortly after announcing its rebrand and the expansion of its Series B funding to $85 billion, Forge has acquired IRA Services. The acquisition is designed to enhance Forge’s ability to serve private-market investors. Forge will now be able to provide an integrated investing experience for investors who want to hold assets with an independent third-party custodian. IRA Services has emerged over the last several decades as a leading provider of custody and administrative services for individual investors, financial advisors, asset sponsors and financial institutions. According to Forge CEO Kelly Rodriques, the acquisition of IRA Services allows Forge to better serve the ongoing liquidity needs of the private market economy by empowering companies, investors, and institutions with liquidity, and providing safe and secure, transparent custodial services. “Recognizing that the private markets seed innovation, our mission is to serve the ongoing liquidity needs of the private-market economy,” Rodriques said. “In joining with IRA Services, Forge will expand its ability to meet the needs of private-market investors by providing an integrated custodial solution that allows them to seamlessly and securely invest in a wide range of innovation companies.” Once the acquisition is complete, IRA Services will be known as Forge Trust and will continue to work with its key partners to provide custodial services.

by Robert Rakowski
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Welcome to the first newsletter of REI INK! REI INK is the weekly e-newsletter companion to the print version of REI INK magazine. Since REI INK is published bi-monthly, we thought it was important to send out weekly e-newsletters to keep our readers abreast of the changes occurring in our fast-paced industry, where breaking news occurs on an almost daily basis. We launched REI INK nationally at the Pitbull Conference in early March. The magazine was introduced to about 600 people as the “new kid in town” that has set a new standard for the real estate investment publishing industry. I could not agree more. Our talented staff did a tremendous job of putting the first issue together, and it’s only going to get better with age. Not only did we bring Monica Mansfield on board as our managing editor, but we also assembled a true editorial board (not just in name only to impress people) who will be helping to guide the magazine forward based on their experience and expertise. As a result of the team’s efforts, we attracted a new international client focusing on capital growth opportunities for investors in medical office buildings. We also gained the attention of some of the top names and companies in the real estate investment industry. And, the real achievement was adding Janet Moore to our team as the vice president of business development and marketing. It seems like everyone in the industry knows and respects Janet, so we were very lucky to get her on the team. We are moving forward at break-neck speed. The next issue is almost complete, the website is up and running, and you’re reading the first of our weekly e-newsletters. What’s in the works? E-mail campaigns for our clients, a media sponsorship for IMN, promotion campaigns by respected companies in the industry and lots more! We’re doing it all by being true to ourselves, respecting our competitors and providing over-the-top customer service. I would really welcome your feedback on both the newsletter and REI INK. Don’t hesitate to contact me at 816-623-0762 or email me at Robert@rei-ink.com. Also, be sure to visit www.rei-ink.com to read more articles and subscribe. Thank You and All the Best! Robert Rakowski, Publisher