Yellen announces the US could run out of cash by June 1st, Munger warns of commercial real estate agony.
As we continue to see a commercial real estate market in freefall, we’re making some big changes here at the newsletter- to put it bluntly, we’re going into crisis mode. I know that many of you are facing professional uncertainty, hard-hit portfolios, and a general sense of malaise that we haven’t seen since the dark days of the 2009 crash, with Fed Chair Janet Yellen stating that the US could run out of cash by June 1st, and Warren Buffet’s right-hand man Charlie Munger warning of “commercial real estate agony” on the horizon.
While we will still be bringing you the best of the best real estate crowdfunding deals, we’re going to dedicate a great deal of coverage to recent developments in the broader commercial real estate markets. I’m doing this to ensure that you, my readers, understand the gravity of the situation in which we find ourselves in- and hopefully use that knowledge to defend your position and find new opportunities in a time of crisis.
With that said, we’ve got a lot lined up for you this week, including a Prime Self-Storage Development in Bellview, FL from Spartan Investment Group and a Prime Equity Big Island Deal from Invest in Kona.
After that, I’m going to cover a new piece in The Real Deal about what the author calls “Real Estate’s Next Big Short,” aka “The Widowmaker,” and coverage of Capstone Equities pouncing on another distressed Midtown hotel, also from The Real Deal.
We will also look at a new webinar from SIMM Capital, covering a topic of interest to many in the space, affordable housing. Moving on, we will check out GowerCrowd’s exclusive Week 17 Crowdfunding SEC Filing Report, and look at the latest episode of my podcast, where I sit down with Davonne Reaves, Founder & CEO of Vesterr.
Let’s get into it.
New Crowdfunding Platform Deals
First up is a prime self-storage development in Bellview, Florida, that sponsor Spartan Investment Group bills as a well-vetted, conservatively underwritten deal in a rapidly growing area of the country. Investor projections for this deal include a 25% annualized projected return, a 2.5x equity multiple, all with a 6-year hold. This video featuring SIG’s Ryan Gibson outlines the details of the property, give it a watch, here.
Next is a primary equity offering for accredited investors from Invest in Kona. This 324-acre luxury oceanfront project, The Kona Estates at Opihihale, aims to take advantage of the frenetic pace of growth in the islands in the post-Covid era. Learn more about this island opportunity on the Invest in Kona Facebook page, here.
General Crowdfunding Industry News
Investors are betting billions of dollars on the belief that remote work and the $108 billion worth of securitized office loans set to mature in the next five years will wreak havoc on the commercial mortgage market, specifically the CMBX index. However, nailing the short requires precise timing and an understanding of the various parties involved, as well as the potential for extended timelines and tricky technical aspects of CMBX.
Despite the seemingly good bet, many caution that the CMBX short has earned its nickname “the widowmaker” for a reason, and success relies on getting the timing right and having the fortitude to stick it out when things get tough. See why people are talking about the CMBX short, and what it could mean for the market as a whole, with this writeup at The Real Deal.
In another piece of distressed real estate-related news, Capstone Equities has acquired the distressed Life Hotel in Midtown Manhattan after its previous owner defaulted on the property’s mortgage. The firm plans to reopen the 98-room boutique hotel later this year under its in-house management brand, Rebel Hospitality. This marks Capstone’s third deal for a distressed Midtown hotel since the beginning of 2021, as the city’s hospitality industry continues to recover from the effects of the pandemic. Read more at The Real Deal.
Crowdfunding Platform Updates
SIMM Capital’s new webinar, featuring Simm Capital CEO and Founder Mat Simmons, looks at one of the pressing questions facing the American housing markets, the lack of affordable housing in many major metros.
While this problem was once relegated to high-dollar coastal areas, it has spread to many parts of the country, including recently booming regions in the Sun Belt, Pacific Northwest, and Northeast. This free webinar looks at why affordable housing is such a safe investment during downturns and recessions, and how investors can learn to build wealth through affordable housing investments. Register for the webinar on SIMM Capital, here.
SEC Filings Graphs
Now onto the GowerCrowd-exclusive SEC Filing data you can only find on my site.
The total number of Reg D (b) and Reg D (c) deals dropped slightly from Week 16 to Week 17, falling by 6, with 29 total deals in Week 17. However, the amount raised rose slightly, from $0.78B in Week 16 to $0.92B in Week 17. Texas held the top spot again, with 10 deals last week totaling $0.28B, almost double the second place contender by dollars raised, which was Illinois, with $0.16B. As is typically the case, most deals last week were small, with 11 small deals (less than $10M,) 4 medium deals (between $10 and $50M), 8 large deals (more than $50M, and 6 indefinite/undeclared deals. Check out the data you can only find here at GowerCrowd on our SEC Filing Page.
Multimedia Links (Videos, Podcasts, etc.)
We’ll finish things off with a look at the latest episode of “The Real Estate Crowdfunding Show.” I got to sit down with Davonne Reaves, Founder & CEO of Vesterr. She launched the firm in mid-2022 as a regulation crowdfunding portal, and as such, has had the distinct pleasure of regularly working with both the SEC and FINRA. Davonne’s professional mission is to bring hotel investing to everyone, regardless of accreditation status.
Give this week’s episode a listen to learn more about why the Vesterr CEO is such a strong believer in the power of hospitality.
That’s it for now- but I’ll see you soon with even more real estate crowdfunding news, new deals, platform updates, podcasts, and more! Until then!
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