Program Materials - ULI St. Louis

Transcription

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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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!
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.
15
Richard N. McCay
CEO and Co-Founder
310.999.3411
[email protected]
Thank You!
16
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.
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
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
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
5
Sophisticated, Intuitive Product
6
Sponsors Create Marketing Materials No more investment decks, inefficient
communication and wasted effort
7
Investors View, Compare & Invest (for free)
Platform is intuitively designed for
easy comparison across asset types
8
Investors Keep Track of Their Investments
Simple platform for Sponsors to
provide investment reports.
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
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
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
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
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
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
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.
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.
18

Program Materials - ULI St. Louis

Transcription

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