Real estate crowdfunding platform, Sharestates, announced on Wednesday that an east coast private equity firm has selected the portal for the purchase of loans with a 2016 target of $60 million.
According to Sharestates, this new partnership reinforces institutional recognition of its underwriting excellence, while enabling the company to continue originating loans at a steady clip as it continues to build a dynamic marketplace for individual accredited investors and institutional capital. The loans will be purchased on a forward flow basis.
Allen Shayanfekr, Sharestates’ founder and CEO, stated:
“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.”
With an average net annual yield of 10.4%, Sharestates has reportedly returned more than $16 million to its investors, with 28 loans paid in full and zero loss of principal. To evaluate each loan and borrower, Sharestates undertakes a 34-point underwriting process that includes a complete analysis of the project’s financial profile, the borrower’s track record, and the property’s fundamentals. All of Sharestates’ loans are secured by the property and the personal guarantee of the borrower.
Shayanfekr commented that the private equity firm chose to target loans on Sharestates’ platform because it sees unique value in the management team’s deep real estate experience, its ability to cultivate a large pipeline of deals and its track record in rewarding lenders. The institutional purchase of their short-term notes allows investors to move their capital into new investments on a regular basis without having to wait for the entire loan term to conclude. Through diversification and redeployment of capital, individual investors can manage their risks effectively.
“Not only does a large volume of loan purchases provide us with ability to offer greater opportunity across the board for both individual and institutional investors, but it also allows us to supplement our already rigorous underwriting with third-party evaluation that comes with institutional partnership. By investing side-by-side with institutional investors, individuals know they are participating in the very best deals.”