Program Materials - ULI St. Louis
Transcription
Program Materials - ULI St. Louis
6.24.15 Urban Land Institute To provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI St. Louis Sponsors ULI St. Louis Sponsors Ameren Services Arcturis Brinkmann Constructors Capes, Sokol, Goodman & Sarachan CI Select Colliers International Commerce Bank Compass Communications DTZ Enterprise Bank Holland Construction Husch Blackwell LLP Kozeny-Wagner McCormack Baron Salazar The Opus Group Paric St. Louis Economic Development Partnership St. Louis Equity Fund, Inc. St. Louis Development Corporation UHY Advisors Real Estate Crowdfinance Primer ULI St. Louis – Crowdfunding Program Gift or Donation • GoFundMe.com • FundAnything.com Pre-Purchase • KickStarter.com • IndieGoGo.com Investment Crowdfinance • • • • P2P Lending [Prosper, Lending Club] P2B Lending [Kabbage, OnDeck Capital] Business Startups [Angel List, Micro Ventures, Circle Up] Real Estate [Tieback, Fundrise, RealCrowd, Realty Shares, Realty Mogul, Patch of Land, Prodigy Network, iFunding] Three broad categories exist. The first two are differentiated in that securities are not being sold. Tieback Realty Finance 2 SAAS Model • Platform fees • Access to data base of investors from prior deals • RealCrowd.com Marketplace / Broker • Compensations is front-end loaded • Provides no investment advice • Interest spreads for debt focused sites Investment Manager / Sponsor Operated • Compensation is back-end loaded • Management fee • Promoted Interest • TiebackRealty.com Three basic operating models employed by real estate crowdfund platforms. Tieback Realty Finance 3 Law Changes • JOBS Act • SEC Promulgated Regulations Technology • Internet • Mobile • Security Social Factors • Broad acceptance of e-commerce • Social Media • Generational shift from home ownership to real estate investment ownership What’s driving the crowdfinance disruption in capital markets. Tieback Realty Finance 4 • Instant distribution • self-effected investing [i.e., e-commerce] Automation • transparency General Solicitation • Advertising • Viral aspects • Super Bowl ads • Books, computers, small appliances, shoes, etc • Stocks, Bonds • P2P Loans, P2B Loans e-commerce • Fractional Real Estate Investments • RECF is the re-intermediation fractional investing through new channels for a more efficient distribution of securities • Crowdfunding is innately a finance business. • Underlying business is riskadjusted finance made more transparent and efficient Real Estate Crowdfinance is the 21st Century manifestation of the 1980’s real estate syndication model. Tieback Realty Finance 5 Shift to Alternatives continues by institutions expected to reach 30% of portfolios for investors with $10B or more by 2016 [McKenzie & Co.] 1.2% shift in sovereign wealth funds represents $50B Institutions remain significantly under-invested in real estate relative to target allocations [Cornell University] by as much as $700B potentially AUM continue to grow with growth in global wealth increasing under-invested real estate accounts Shift to opportunistic and value-add strategies continues for institutions seeking higher yields [Cornell University] Solves Real Problems • Limited opportunities made available timely basis • Less than optimal portfolios • Risk / Yield balancing Efficiency • Global reach for investors and sponsors • Due diligence processes • Transaction processes Transparency • Social media and bad actors • Wisdom of the crowd applied to offerings • Pricing improves helping deals get done faster Why is real estate crowdfunding succeeding? Tieback Realty Finance 6 2.57B RECF Estimate 2015 0.257% $1T Annual CRE Capital Market $96B Estimated Crowdfunded Investments 2025 Home Mortgages are a $1T annual market that is opening up to distribution platform financing SFR assets total $20T in USA alone $2T in new commercial and residential financings are originated annually in USA alone Real estate crowdfinance market potential is huge as you would expect. Tieback Realty Finance 7 2025 2015 2014 $2.57B 2013 $1.04B • 38.5% compound growth according Massolution.com in the 2015CF-RE Crowdfunding for Real Estate. $96B $396.4 2012 $19.1 Million Growth in Real Estate CrowdFinance. Tieback Realty Finance 8 Reg. D 506 [c] • • • • • • Accredited Crowdfunding General Solicitation Verify Accredited Status Unlimited raise How many investors in this bucket self manage their investments? 8.5 million people in USA Reg. D 506 [b] • • • • Self Accreditation With “cooling off” period of 21 days SEC No Action Letters Many lawyers disagree Reg. A+ • • • • • • No requirement for accredited status General Solicitation $50 million per deal per year No Blue Sky Skinny SEC Filings 366 million people globally have $100K to $999K in wealth totaling $105T! Available exemptions from “full” registration of real estate securities. Tieback Realty Finance 9 Under-invested Institutional Investors • Cornell University Survey of Institutional Real Estate Allocations • Real estate allocations are being increased especially in higher yielding strategies • Under-invested amount could be as high as $700 Unaccredited Individuals with Wealth to Invest • 366 million people globally have wealth $100K to $999K • Totaling $105T ! [UBS • Reg A+ allows you to access unaccredited investors Accredited Individuals who Self Manage Portfolios • 8.5 million accredited in USA • Fraction of that 8.5M registered on RECF sites (less than 150,000) • Accredited definition could change providing a sophistication standard • How many of 8.5M will decide by pass their financial advisors? How many have the time? Buckets of capital that will be more easily accessed with a robust crowdfinance infrastructure in place. Tieback Realty Finance 10 BD Bacata – Largest to date 17 John Street – Adaptive Re-use / Institutional Debt • ProdigyNetwork.com • $171.8M of $240M from 3100 investors • Tallest building in Colombia • MXD Use residential / commercial • Transformation of Lofts to Extended Stay Hotel • Includes 84 William Street • $25M raised as equity from 10 Countries and 12 states • Deutsche Bank in senior position Fulton Street Condo – Entire Cap Stack Hard Rock Hotel Palm Springs – Hyperbole Award • iFunding.com • Raised $8M to purchase of land • $42M more equity to be raised • Arranging construction loan of $150M to $200M • 250,000sf with 75 stories • Raised $1.5M for 15% stake from 85 investors • Capital used for T.I.s for spa and night club. • Kickstarter-type benefits included for investors • Explained as purchase of the hotel which created global press Oak Hill Medical Bldgs. - Foreign Platform and USA Deal 3 World Trade Center - Neil Armstrong Award • One small step for 3 WTC. One giant leap for real estate crowdfinance. • $5M slice of bonds • Yielding 5% tax exempt • Fundrise.com • WealthMigrate.com based in South Africa • Medical buildings in Georgia • Raised $5.725 for $16.2M purchase • 27 international investors Sample of real estate projects crowdfunded. Tieback Realty Finance 11 RealtyMogul.com Realcrowd.com • $9.7M Series A from Canaan Partners • $45M valuation? • 15,000 registered users • $70M raised in 240 deals • $2M Convertible Note • $28M Valuation • 14,000 registered users • $30M in equity raised iFunding.com Fundrise.com • Raised $31M Series A • Pre-money valuation $77.5M & post-money valuation $108.5M • Investors include Ackman-Ziff, Silverstein Properties’ Executives and Renreninc.com [Chinese Tech Company] • Renren invested in SoFi P2P Student Loan Platform PatchofLand.com • $2M crowdfunded on Crowdfunder.com • Residential flips mostly • Family office partner • But Fulton Street deal mentioned earlier RealtyShares.com • $2.5M crowdfunded on Seedinvest.com • $23.5 Series A including Ron Suber, President of Prosper.com • Short term house flip loans is specialty • Disrupting hard money • $1.9M from General Catalyst • $10M Series A from Menlo Ventures • Residential flip market like Patch of Land • $300M in deal flow to date VC’s / Real Estate Execs love the real estate crowdfund space because the disruptive opportunity in a $2T Market. Tieback Realty Finance 12 Condo Development in Newport Beach, CA Distressed Residential Financing • 49 Luxury Condos in Fashion Island area • $165M in potential sales value • $20M crowdfunded equity once entitled • Late summer time frame • Continuation of analog program • $150M placed for public REIT [ARPI:NYSE] • Revolving credit facilities with equity • Capital market exceeds $100B annually • Institutional capital in the game • Warehouse facility used to park individual draws during crowdfunding process • Warehouse facility leveraged generating 25%+ return potential • Immediate demand fro existing clients of $350M+ High-rise Residential Tower in San Diego, CA • 275 units plus 8400 sf of retail • Land loan in place converts to mezz • $40M in EB-5 financing in January • $10M in crowdfunded mezz w/participation Assisted Living in Indio, CA • 110 unit assisted living facility • $3M participating land loan will crowdfunded • 25% participation in profit when sold to EB-5 Partnership • 24% return at 60% LTV Tieback Realty Finance deals soon available for crowdfunding. Tieback Realty Finance 13 Sports Facilities will be crowdfunded Architectural Statement • Built as a “smart” mixed use real estate development with 360/18/7 revenue streams • Fans become landlord to team with burdens and benefits of fractional real estate ownership creating an economic bond to go with the emotional bond • Government revenues would increase without the sucking sound of debt service payments going to NYC • Make architectural statement not an industrial statement [Levi Stadium] • San Diego CSAG’s financing recommendation would cost the local community at least $2.5B versus a crowdfunded stadium according our summary analysis. Industrial Statement “Effective” Securitization • Provide investment tranches • Rating Agency? • “Build Your On Security” Publicly Traded Funds • Secondary market liquidity needed to create pull through • Pass through tax structures • Pool of Reg A+ Offerings Blind Pools • Reg A+ Deals Predictions! Tieback Realty Finance 14 Quality of Deal Flow • Proprietary skills matter • Relationships matter • Track record matters Ability to Sustain Performance • Cycles happen • Deals falter Investor Experience • Transparency • Crisis management • Returns fix most problems Its like déjà-vu, all over again. Tieback Realty Finance 15 Richard N. McCay CEO and Co-Founder 310.999.3411 [email protected] Thank You! Tieback Realty Finance 16 Tieback Realty Finance 17 JOBS Act • General informa,on only • Not legal advice • Consult securi,es a7orney • The choice of a lawyer is an important decision and should not be based solely on adver,sements [email protected] JOBS Act Raise Preemp,on Adver,se Investor Verify Restricted Audit Repor,ng Test 506(c) Unlimited1 yes yes AI yes yes no no no 1 $10 mil. assets + 2,000 investors 2 Canadian companies. $75 mil. float or $50 mil. revenue 3 Transfer agent required 4 < 300 Reg A+(T2) $50 mil2 yes yes AI/10% no no3 yes yes4 yes Title III $1 mil yes yes $2k/5%/10% no yes $500k yes no [email protected] Company Overview June 2015 All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. What Does Selequity Do? Selequity is an online investment marketplace that connects commercial real estate operators with accredited investors. FOR SPONSORS FOR INVESTORS We offer access to capital, efficient transaction processes, and an easy investor relations platform. We enable the country’s 8 million accredited investors to better participate in an $11T asset class. All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 2 New Law Enables New Opportunity JOBS Act of 2012 Enables online marketing of investment opportunities to 8 Million Accredited Investor Households $11 Trillion in Assets All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 3 A System of Entrenched Problems Old industry regulations imposed hurdles to both fundraising and deploying capital PAIN POINTS FOR INVESTORS PAIN POINTS FOR SPONSORS Lack of Access to Opportunities Large Investment Required Complicated Investment Process Illiquidity Investor Solicitation Restrictions Geographic Limitations High Cost of Raising Capital Investor Communications All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 4 How We Solve These Problems Selequity provides solutions on BOTH SIDES of a real estate investment: SOLUTIONS FOR INVESTORS SOLUTIONS FOR SPONSORS Online Access to Quality Investment Opportunities More Accessible Minimum Investment Requirements Simplified Investment Process Enhanced Liquidity Options Online Access to Investors / New Capital Marketplace Technology Enabled Transactions Capital Raising Efficiency Simple Investor Relations and Financial Reporting All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 5 Sophisticated, Intuitive Product All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 6 Sponsors Create Marketing Materials No more investment decks, inefficient communication and wasted effort All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 7 Investors View, Compare & Invest (for free) Platform is intuitively designed for easy comparison across asset types All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 8 Investors Keep Track of Their Investments Simple platform for Sponsors to provide investment reports. All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 9 Two-Sided Marketplace - Supply The Market Potential for Online Capital Markets for Commercial Real Estate Is Huge Commercial Real Estate Market Size $11.3T $1.3T Current Offline Turnover Online CRE Investment Opportunity Supply $130B* Total US CRE Market (100%) Equity/Debt Annual Turnover** (10%) Online Adoption Rate (10%) *Massolution 2015 Market Report Anticipates 2020 CRE Online Syndication Market Size of $250B **”Democratizing Commercial Real Estate Investing: the Impact of the JOBS Act and Crowdfunding on the Commercial Real Estate Market”, Burgett and Mcdonald, 2013 All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 10 Two-Sided Marketplace - Demand And The Demand Is Even Bigger *Projections do not include institutional market participation Accredited Investor Market Current RE Allocation Online Investor Demand $11.4T* $1.4T $140B Accredited Investor AUM (100%) 2014 RE Allocation** (10%) Annual Reallocation (10%) *Real Capital Analytics & CoStar, cited from www.bizjournals.com/sanjose/print-edition/2013/09/27/realcrowd-gathers-investors-for.html ** Capgemini & RBC Wealth Management “United States Wealth Report 2014” notes 14% allocation among HNWI, and 1% reallocation 2013-2014 All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 11 Barriers To Entry Network and Track Record Have Positioned Selequity to Lead, Quickly 1. Network: We’ve worked with target client base in 60 markets nationwide to enhance our business development 2. Regulatory: We have secured investment from a nationally recognized law firm to advise on regulatory uncertainties 3. Bringing Tech to CRE: We’ve built new software and technology for the largest private commercial real estate services firm in the U.S. 4. Leadership: We’ve integrated a recurring revenue model into a fee-based business, to generate $750M in annual revenues All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 12 Investor Marketing National Public Relations Public'Rela+ons' • News releases ! News%Releases% • Industry conferences ! Online%Press%Room% • Media & Analyst outreach ! Industry%Conferences% Social Media ! Advisory'Panels' • LinkedIn ! Analyst%outreach% ! Thought'Leadership'Profiles' • Facebook Twitter Content Marketing Social'Media' • Blogs & Articles ! LinkedIn% Launch at TechCrunch Conference ! Twi=er% • Surveys & Case Studies • Webinars Reported on over 150 media outlets ! YouTube% including the Boston Globe, Miami ! Facebook% Advertising Herald, Denver Post, San Jose • Search Engine Marketing Mercury News and the Dallas • Investor Publications Morning News Direct Marketing Over 3000 website visitors • email & Direct mail • Per Property Direct Marketing local connections • email • Direct mail • Telemarketing Advertising • SEM to local market Public Relations • Biz Journals • Business editors • Electronic media Sales Tools • Brochure • Video Event Marketing • Event sponsorship • Award sponsorship All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 13 Sponsor Marketing Direct Sales Network First Target Markets High Transaction Volume, Positive Pricing Trends, Employment Growth, Established Cassidy Turley / DTZ Public'Rela+ons' Network ! News%Releases% ! ! ! ! ! Online%Press%Room% Regional Business Industry%Conferences% Advisory'Panels' Analyst%outreach% Thought'Leadership'Profiles' Real Estate Publications Social'Media' ! LinkedIn% ! Twi=er% ! YouTube% ! Facebook% Journals Regional Trade Publications Real Estate Companies All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 14 AJ Chivetta 314.780.1812 [email protected] Bill Florent 314.378.7842 [email protected] Executive Team Comparison Company Name Revenue of Company Managed Employees Managed Office Locations Managed Real Estate Transactions 100 Cassidy Turley $750M 4000 60 $100,000,000,000 RealCrowd 20-25 Various Not Disclosed 9* 1 $3,000,000,000 iFunding 15-20 Unnamed Not Disclosed Not Disclosed 1 $2,610,000,000 Fundrise 10 Westmill Capital Partners Not Disclosed 4 1 $500,000,000 Realtyshares 1 Realtyshares <$5M 10* 1 <$1,000,000,000 RealtyMogul 1 Realty Mogul <$5M 12* 1 $8,000,000,000 Selequity Management Experience (years) *Employee headcount of current company managed **Data compiled through profiles of founders and open source web information All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 16 The Selequity Advantage Mark Burkhart AJ Chivetta Bill Florent Former CEO Cassidy Turley led growth from 50 to over 3800 employees and increased revenues to over $750 million nationwide. Partner at Armstrong Teasdale, primary outside counsel for Cassidy Turley, with more than 30 years experience across the US, Europe and China. AJ has been recognized as one of the “Best Lawyers in America". Former CFO of Cassidy Turley, Bill also served for over 10 years on Cassidy Turley’s board of directors and executive committee. Led key areas including finance, accounting, IT and investor relations. Bob Couch Maria Desloge Ken Herold Served in marketing roles with Silicon Valley companies for the last 17 years. Bob has with over 20 years proven track record developing, implementing, and leading globally reaching integrated marketing plans for international and domestic B2B and B2C companies. Key member of Cassidy Turley’s outside legal team at AT, participated in major acquisitions. Associate Director for the State of Missouri Department of Economic Development China Office, which was hosted by Armstrong Teasdale. Served as CKO (Chief Knowledge Officer) for HOK, one of the world’s largest international architecture and engineering firms. Currently he serves as a CTO and consultant for companies and more than 25 startups in the St. Louis area. All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 17 The Selequity Advantage Jake Liberman Teddy Dozier Operated real estate investments on behalf of toptier institutional capital partners at 643 Capital where he worked to expand the investment platform from $12M to over $300M AUM. Teddy brings creativity and versatility as Selequity’s graphic designer and front end developer. A product of LaunchCode CS50 and Furman University, Teddy masters Adobe Creative Suite and design principles to address Selequity’s design and UX initiatives. Mike Ihbe / MustWin Armstrong Teasdale Founded MustWin after stints at Apple, Amazon and Yammer. MustWin is a tech developer and consultancy that has worked with 3 Fortune 100 companies and 15 pre-funding clients that went on to become VC backed companies. Armstrong Teasdale is a leading national and international law firm based in Saint Louis, MO. With an entrepreneurial spirit and reputation for capturing the latest legal trends, AT is embracing the opportunities created by the JOBS Act. All contents copyright © 2015 Selequity/CrowdedBuildings LLC. Strictly confidential. Do not reproduce or distribute without express written consent from Selequity/CrowdedBuildings LLC. 18