Current Market Problem

Real Estate Investment Trust (REIT) driven

REITs driven by dividends. REITs retain little income for new acquisitions except by asset sales or costly equity raises, Slow asset growth.

Slow wealth factor using low leverage.

Perpetual model and liquidity but not a wealth creator.

Private funds

Private funds have limited lives. Retail investors have zero access to these CRE assets.

Available to family home offices, billionaires, and institutional investors.

No liquidity, assets are often disposed in a down real estate cycle.

Limited Partnerships/LLCs

Limited Partnerships/LLCs have limited lives, no control over exits, no liquidity, and limited access for retail investors.

Tenants in common

Tenants in common require consensus to dispose of an asset. Loss of control and no liquidity.

Crowd Funding Risks

Limited types of CRE investments available directly to retail investors.

Like all other alternative investments, crowdfunding investments are typically entirely illiquid for three (3) years to seven (7) years.

High cost of capital often more expensive than institutional sources.

Underwrite the assets conservatively. Borrowers receive less proceeds than from other private sources and at higher costs.

Risk mitigation-Have few experienced asset managers/servicing departments causing substantial potential losses and legal costs for their investors in down cycles.

Use third party sponsors and operators. The crowd funders have little or no control over the assets thus possibly causing additional losses.