Online real estate crowdfunding marketplace RealtyShares is launching a diversified marketplace equity fund for institutions, single-family offices and high net worth individuals.
“This fund represents our first significant outreach to larger investors, and will provide them with exposure to small-balance commercial real estate projects that may not previously have been a focus due to the smaller check sizes these projects typically require,” CEO Nav Athwal said.
Mr. Athwal added many secondary markets offer attractively priced assets with solid fundamentals or secular growth. The key is working with good developers and operators.
“We are aiming for a diversified pool of mainly commercial projects with a value-add approach, many of them already generating attractive cash flow.”
The small-balance space brings opportunity, VP of Business Development Javier Benson said.
“The small-balance space has a number of interesting characteristics, namely that investors can take advantage of the lack of liquidity in this sub-institutional stratum to potentially realize outsized returns, which is further augmented by the high occurrence of asymmetrical information in this space.
“It’s difficult and costly for investors to sift through that information, which is what creates the opportunity.”
Value exists in smaller commercial assets located in often overlooked secondary markets, ones still recovering from the recession, Mr. Benson explained.
“These markets may also attract less investor competition, since global and other larger investors typically find it less efficient to deploy capital into this space.
“RealtyShares has started to solve that problem with technology.”
Mr. Athwal explained the fund’s purpose.
“Our Diversified Marketplace Equity Fund is meant to be a low-fee alternative to public and private REITs. The Fund’s objective is to invest across a diverse set of properties, including multifamily apartment complexes, retail shopping centers, self-storage facilities, office buildings, single-family residences and other properties located predominantly in metropolitan areas with populations greater than 200,000. The fund must also adhere to certain concentration limits relating to property type, location and minimum number of investments.”