NEW YORK CITY—Now that the economy is stable and investments on the whole are prospering, buyers seek easy to manage products that put an end to aggressive portfolio management. To that end, commercial real estate backed by alternative funding is well-suited to many investors, according to a panel of industry experts at the 13th annual RealShare Net Lease conference late last week.
“Investors want to be in something stable and extremely passive,” stated Mary Jo Wenmouth, VP, senior private capital consultant, Inland Securities Corp. “The primary goal is preservation of capital.”
Adds Jeffrey Thomas, founder, Thomas Co., “People are done with active management and net lease fits into that.”
The volume of 1031 exchanges illustrates this point. “We have clients who've made an enormous gain this way, driven by real estate appreciation,” noted Robert Lee, director, capital markets, Silver Portal Capital.
Some market players are very intrigued by perhaps the newst method of investing: crowdfunding. It allows investors to “buy into deals,” said Fundrise co-founder and president Dan Miller, “by putting up as little as $100. There should be broader access to deals.”
Large investors are getting involved too, he noted. “You're starting to see institutions look more seriously at these platforms “
Miller quickly quieted fraud concerns expressed by another panelist. “There's no record of fraud in crowdfunding and trying to commit fraud in a public place in front of the SEC is probably not the best way to go about it.”
For other buyers, the Delaware statutory trust structure offers a key advantage over the tenant-in-common offering, noted Wenmouth. “The TIC required voting and unanimous consent was never achieved. In a DST, there are multiple investors but no voting rights. So it's streamlined and can move more quickly than TICs. DSTs are much better positioned to react to the market.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
