Markets & Economy

Web-based equity raises attract more institutional investors

Crowdfunding groups are receiving increased interest

As they evolve and raise capital for more deals, crowdfunding groups are receiving increased interest and direct commitments from institutional multifamily investors.

Realty Mogul just received $250 million in direct commitments from large institutional investors with sizable balance sheets. The commitments will allow the crowdfunding platform to offer three- to five-year floating and fixed-rate bridge loans commonly used in value add acquisition plays.

The floating-rate loans will be priced in the 4 to 6 percent range, while fixed-rate pricing will come in around 4 percent.

“This is the first time an online marketplace is able to offer a competitively priced CMBS loan,” said Jilliene Helman, CEO of Realty Mogul.

Realty Mogul’s expansion also includes working on transactions in new markets. The platform recently raised capital for the acquisition of a 74-unit rental property in Portland, Oregon — the firm’s first transaction in the state. The buyer was Trion Properties, who is planning to significantly renovate the asset.

Similar to Realty Mogul, Fundrise recently received commitments from six institutional funds that will finance more than $100 million of investment via the platform.

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EarlyShares, which seems to have the most success with multifamily projects, teams with InvestCo to raise capital for a group of rental properties in Philadelphia. RealtyShares raised $10 million in funding from venture capitalist Menlo Ventures to grow the number of projects made available to investors.

CrowdStreet posts an $18.4 million equity investment opportunity in Olympus Fund IV, which currently features three Class A rentals. The fund with add two or three similar properties during 2015.

Other active crowdfunding platforms that will raise capital for more multifamily deals and receive increased interest from institutional groups during the second half include Collaperty, iFunding, Prodigy Network and Patch of Land.

The popularity and acceptance of crowdfunding has grown to the point where more market-specific platforms like CityFunders, a New York-focused firm, should emerge.

Email Erik Pisor.