LEX Markets To Take Another Building Public In An IPO

Last fall, LEX Markets launched an IPO for a partial share of a retail-and-office property in New York City that was open to investors with a minimum of $250 to put in. After similar “multiple successful IPOs,” the company is taking a Seattle building public, according to a company press release.

The building, Solis, is in the Pine-Pike corridor and is another mixed-use development, this time combining multifamily and retail with a sustainability focus. The six-story building has “34,260 square feet of total rentable space: 5,960 square feet across three retail units on the first floor, and 28,300 square feet across 45 residential units for rent on floors two through six.”

According to the company, it has a platform that allows people to “open a LEX account, browse opportunities in various asset classes such as multifamily and office buildings, and buy shares of individual buildings.” Investors can earn quarterly income and trade shares on the LEX public market, although liquidity is not guaranteed.

Solis, at 1300 East Pike St., is in a neighborhood with restaurants, bars, retail, and entertainment; is near major tech employers and universities; and “is built to Passive House standards, designed to operate using substantially less energy and achieve significant cost savings.” LEX says the property is also exempt from property taxes on 61% of its assessed value for ten years.

Ultimately shares will trade on secondary markets through normal brokerage accounts.

In November 2021, a company representative said that the ability to invest in a “single asset, not a pool of assets, is appealing to that do-it-yourself stock picker crowd.” LEX at that time may have been the first successful launch of an IPO for shares of a CRE property.

Unlike the more typical process in creating public entities, this LEX’s offerings occur under SEC Regulation A, which “allows companies to offer and sell securities to the public, but with more limited disclosure requirements than what is required for publicly reporting companies,” according to the SEC.  “In comparison to registered offerings, smaller companies in earlier stages of development may be able to use this rule to more cost-effectively raise money.”

Under Regulation A, according to the SEC, there are limitations on how much non-accredited persons can invest: “no more than 10% of the greater of the person’s, alone or together with a spouse, annual income or net worth (excluding the value of the person’s primary residence and any loans secured by the residence (up to the value of the residence).”