This is the third on my investment status through the first half of 2016. The first post two post were about my Realty Share and direct investments. Today’s update is from my Real Crowd investments. Again, my investment breakdown over the different crowdfunding sites or methods:
Investment Platform/Method Real Estate Portfolio %
Private Investment Group 27%
Direct with Sponsors 22%
Real Crowd 21%
Realty Shares 10%
Realty Mogul 7%
Fund That Flip 5%
Crowd Street 2%
Patch of Land 2%
Peer Realty 1%
I made 11 investments with Real Crowd since December of 2013. Overall, Real Crowd has established sponsors with above average track records. In fact, my very first real estate crowdfunding investment was with Real Crowd’s Fort Davis Center.
Washington DC Office/Retail Center – My first Real Crowd Investment from December of 2013. This is an office retail center in Washington DC. The cash on cash was projected to be 12% for the first 5 years and have an IRR of 18%. Fort Davis has paid a 10% distribution each quarter until the Q 4 of 2015. A 3000 sq. foot area became vacant and they leased it $10 a foot above proforma, but required a $250k tenant improvement package. They suspended distributions for two quarters for the TI, but they are now 100% leased at rates above proforma. I anticipate higher cash flows in the future and the property should be expectations.
Denver CO Apartments – This multifamily in Denver, CO from January of 2014.Cash flows were projected between 8-10% with an IRR of 17%. Terms are 8% preferred and a 75/25 split. 71% of the property has been renovated since the purchase. Cash on cash distributions in 2015 were 14% after a q4 bonus. Distributions for the first two quarters of 2016 have been 10.5%. Rental rates have beat expectations and occupancy is meeting expectations on this property. Virtu appears to be beating projections.
Wisconsin Fund – This investment fund from February of 2014. This diversified fund has a high concentration of multifamily. The cash on cash was projected between 7%-10% with a 15% IRR using low leverage. Terms are 8% preferred with a 70/30 split. The fund is current on its 8% preferred return. The fund is rather unique in that it returns all investor capital before they take any promote. Over 30% of the fund capital has been returned from one property that produced over a 100% ROI. All of the fund’s assets are meeting or beating budgets and a FL MF deal closed last month with a ROI over 50%. This should result in more capital being returned. They expect 2 or 3 more profitable exits in the next 12 months.
LA Industrial – This ground up industrial building in CA from May of 2015. The forecasted IRR was 18-20% and the terms were 8% preferred and a 60/40 split. The building was sold in July of 2015 with a 1.35x return and a 29% IRR. This investment soundly beat expectations.
Jacksonville, FL Apartments – Apartment investment from Sept of 2014. The cash on cash yield was projected a 10.75% and an IRR of 15%. Terms are 8% preferred with a 70/30 split. The property was under contract earlier this year for $7.2 million that would have resulted in a 35% IRR. That sell fell through, but they sold the property last month at an IRR of about 25%. This properties NOI has exceeded budget by over 25%. This property beat the sponsors expectations.
Retail Income Fund – The sponsor on this retail fund that primarily develops ground up NNN retail properties. Terms are 7% preferred, 80/20 to a 15% IRR and then a 70/30 split. This investment from February of 2015 has cash calls and has requested only 50% of the pledged capital. Its projected cash on cash is 5% with a 15% IRR. There first distribution was 5% in Q1 of 2016. They do appraise their holdings each quarter and the IRR to date on 10 projects in the fund is estimated to be 29.5% gross and 19.7% net to investors. They appear to be beating projections.
Birmingham Ground Up – This two tenant ground up development in Alabama from July of 2015. Terms of the deal are 12% preferred and a 90/10 split. Cash flow is projected between 3%-9% with an IRR of 15%. Both buildings are fully leased at the proforma projections and construction will be complete during the 3rd quarter of 2016. No distributions have been made but the project seems to be on track.
Houston Apartment - The Houston apartment investment from September of 2015.Cash on cash was projected at 11% and an IRR of 18%. Terms are 10% preferred with an 75/25 split. The property is 95% leased and YTD cash flows have exceeded budget by $161,000. Rents are 8% above proforma and they are paying a 10.5% cash on cash distribution so far in 2016. This project appears to be beating expectations.
Phoenix Industrial Building - This Phoenix industrial building is from December of 2015. Targeted cash on cash is 6% and an IRR of 27% on this 2-year hold. Terms are 9% preferred with an 85/15 split. The deal had a lease expiration in 2017 and the returns were contingent on a new lease signed at market rents. An LOI was recently signed with terms close to expectations. The property should be sold after a one year hold at an IRR very close to projections.
Spokane Washington Extended Stay Hotel – This extended stay motel in Spokane, WA from April of 2016. Cash on cash returns are projected at 19% with a 25% IRR. Terms are 10% preferred with 70/30 split. Investors owned the property for less than 2 months of the second quarter of 2016. The cash on cash was 19.6% for the quarter and net income beat budget by over $100,000. (125k vs 18k) It’s very early, but so far the sponsor is far exceeding expectations.
Industrial Opportunity Fund – The industrial building investment fund from July of 2016. Returns are estimated at 15% and the terms are 10% preferred with an 80/20 split. The fund’s track record has an IRR in excess of 25%. It’s too early to know how this investment if performing.
In addition to these 11 investment I made one with a Crowd Street a similar platform to Real Crowd. They are a listing platform and take no fees from investors.
High Growth Fund – The fund that buys distressed 1031 and TIC properties from August of 2016. Terms are 15% preferred then a 50/50 split. The targeted IRR is 30% over the 3-year term of the investment. There are a large number of TIC loans maturing over the next 24 months that make this unique investment alluring. It’s too early to evaluate this investment progress.
As you can see all of my Real Crowd investments are meeting or beating expectations. I have been very pleased with the quality of the sponsors and investments on this platform. The fact that investors can discuss these deals openly (they use SEC rule 506C) is another reason to choose Real Crowd investments over the 506b platforms that charge annual investor fees and do not allow discussion. (Realty Mogul, Realty Shares and iFunding)