By Guglielmo de Stefano on Friday 26 February 2016
East Coast private equity firm agrees to invest $60m through Sharestates.
US real estate crowdfunding platform Sharestates has announced the closure of a deal with an as yet unnamed East Coast private equity firm for the purchase of loans with a 2016 target of $60 million. The platform sees the agreement as clear evidence of the quality of the products offered and as an endorsement of its underwriting procedures. The loans will be purchased on a forward flow basis.
Founded in July 2014, Sharestates is an online investment platform that allows investors to participate in real estate funding projects. Sharestates sources and qualifies potential opportunities and offers securities to accredited investors through its online platform. The platform claims to be one of the few online companies in the world to offer such opportunities to non-accredited investors, with over $4 billion worth of real estate transactions concluded to date.
Allen Shayanfekr, Sharestates’ founder and CEO, commented:
“This relationship is confirmation that Sharestates’ ‘gold standard’ underwriting program, which has set us apart in terms of loan performance, puts us at a unique advantage in drawing capital to our platform. The ability to attract institutional capital enables us to provide more investment options and flexibility to our individual investors, who will remain critically important in our mission to bring real estate investing to a broader group.”
Digging into our archives, this is not the first time that Sharestates has clinched an institutional funding commitment. Last May, the Ranger Direct Lending Fund – a pooled investment vehicle dedicated to direct lending investment – committed to deploying $30m in fractional and whole loans through its platform.
Last week, AltFi reported a similar deal inked by Patch Of Land. The US real estate crowdfunding platform announced the closure of a $250m agreement with an East Coast credit fund that will purchase loans in a forward flow arrangement. Patch Of Land, which is similar in structure to Sharestates, recently argued that these kind of institutional agreements serve as clear evidence of the quality of a platform’s products and of the scalability of its investment opportunities.
From an external perspective, these type of deals are also a sign that PropTech – which involves the automation of the many steps of the property buying and selling process – is rapidly becoming a major force within the alternative credit space. Indeed, according to a recent report produced by Nesta and The University of Cambridge, the combined equity and debt-based funding in the real estate sub-space amounted to almost £700 million in 2015 in the UK only – representing approximately 21% of the broader alternative finance space. Will 2016 be the year that real estate crowdfunding comes to the fore?