By Ryan Weeks on 24th January 2017
Newly launched property crowdfunding platform lists first deal as parent co. looks ahead to plans for global secondary market.
Flying somewhat under the radar in a busy 2016 was Global Alternatives’ acquisition of early-stage property investment platform Property Crowd. But it won’t stay quiet for much longer. Now revamped, Property Crowd has listed its first deal since the takeover, offering investors an 11.2 per cent IRR.
Global Alternatives is calling the deal “institutional grade”. Investors buy in via a bond issue with pass-through exposure to a short-term senior loan. The loan has a conservative loan-to-value ratio and is secured against an investment grade, Grade II listed asset in Greater London. The deal is open to professional investors and high net worth individuals, who will participate alongside an experienced principal lender. This lender is responsible for originating the deal, and for all the associated underwriting. The minimum investment is £5k.
Global Alternatives says that the Property Crowd platform is designed to offer investors “the transactional integrity and custodial safeguards associated with publicly-listed securities”. Founder and CEO Rohin Modasia (pictured above) is of the belief that this level of sophistication does not currently exist within the property crowdfunding space – at least not within the UK or Europe. Hence his decision to snap up and re-engineer Property Crowd last year.
But Modasia’s plans extend far beyond operating a single property crowdfunder. His vision is to create a global exchange for investment based property crowdfunding. Property Crowd will list its own deals on this exchange, and so too – if all goes according to plan – will a range of other property-focused crowdfunders from around the world. Modasia suggested in an interview with AltFi that the bulk of the activity is likely to flow from the US at first, given the large number of property crowdfunders in that market. These include such names as RealtyMogul, Patch of Land and ShareStates. But we do not yet know which of these platforms are willing to play ball.
“We see the next step in the evolution of crowdfunding being the manifestation of our vision: a cross-border secondary market with liquidity generated from the trading activity of an international investor base and dedicated market-makers, rather than the finite balance sheet of any single sponsoring platform,” said Modasia.
The absence of the word “property” in the above quote is quite deliberate. Property represents just the first in a series of planned stops for Global Alternatives, which in time hopes to evolve into a go-to source of liquidity for a wide variety of alternative assets.
Despite widespread acknowledgement that the development of a pan-industry secondary market will be a crucial step in the maturation of the crowdfunding industry, there is currently a notable lack of willing developers. US investment service Orchard has stated on record that it is working on a solution for the marketplace lending sector, but there is little else beyond that.
Could the aptly named Global Alternatives provide an answer?
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.