Orest Mandzy, Managing Editor at Commercial Real Estate Direct
The Original Online Real Estate Content Marketer
It’s real simple. When one of the leaders of the commercial real estate industry writes a seriously excellent article about real estate crowdfunding and then puts it up on one of the top real estate news websites AND sends it out to all his subscribers and THEN makes what would otherwise be a paid subscription totally free to read the article, well, you immediately invite that fellow on your podcast.
Learn from my guest today, Orest Mandzy, Managing Editor, Commercial Real Estate Direct, how he has built an entire CRE information business online, starting over twenty years ago when it was just experimental to have online businesses, unlike today when it's mandatory.
Be sure to sign up for your CRENews subscription here and read his article on crowdfunding for free.
What You're Going to Learn
- Commercial Real Estate Direct - a news information site
- Commercial Real Estate Direct and its real estate audience
- Crowdfunding is a more efficient form of syndication
- Delivering honest news and information in the RE industry
- Incredible growth of crowdfunding to raise capital
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Commercial Real Estate Direct - a news information site
ADAM GOWER: Commercial Real Estate Direct. How would you characterize that company that you built? Is it a news organization or is it data aggregation and analysis?
OREST MANDZY: So we do some data aggregation, but we're primarily a news and information site. So we're a subscription only service. There are - we have a low tier where you can see our headlines and download some stories. We maintain a database of - we've been tracking property transactions, property sales. So we maintain a database and we make that available to some of our upper tier subscribers. And we also track a lot of the CMBS market, new issuance, how much volume gets done, loans that go bad we track, that sort of stuff.
Commercial Real Estate Direct and its real estate audience
ADAM GOWER: Give me a sense, first, of who your traditional audiences at Commercial Real Estate Direct. Who reads your journal? Who is your ideal avatar and then let's talk about the interest in crowdfunding.
OREST MANDZY: Sure. So our subscribers tend to be - well they're all commercial real estate professionals. That entails: investors, brokers, lenders, institutional investment managers, asset managers. I already said brokers, service providers and things like that. We like to track - our sort of focus is tracking the capital markets. So, where's the money coming from? What are its terms and who's getting it? What asset classes are in favor? What geographies are in favor? So crowdfunding is fascinating because it's filling, much like what happened after following the SNLs.
The SNLs created, or their departure created a vacuum for middle market lending. And that's where the CMBS market stepped in. So, you had this, and I learned this from reading your book, which is an outstanding book because it was a quick read.
That, maybe it's not the same kind of void but the syndication market kind of, is being taken over by the crowdfunding market. It's a more transparent market, more efficient market. It appears to be. And the data seems to sort of reinforce that in that, it takes - folks are able to invest in a much more efficient manner than they used to before.
Crowdfunding is a more efficient form of syndication
ADAM GOWER: So that's fascinating to me that you would say that. When you say crowdfunding is a more efficient form of syndication. Just kind of explain what you mean by that.
OREST MANDZY: Well, so say I'm developer XYZ and I'm looking to raise 20 million dollars for, you know, a 100 million dollar project or something like that. In the olden days, I'd go through my RIAs - registered investment advisor or whatever network I have in place. And I'm seeing the same folks time and again through crowdfunding. Put it on whatever site you want, and you're going to get exposure to investors you had never heard of before. So it's - you're able to diversify your investor base. The investors themselves are able to diversify their investment base. So, it's kind of a neat thing. And, as you know, because you told me through your book, the growth of crowdfunding has been astronomical. I mean, who would have thought that in four years you would see the level of penetration that you have?
ADAM GOWER: The biggest number was the growth from seven billion in 2019 to 15 billion crowdfunded in 2020. I mean it's just
OREST MANDZY: Right.
ADAM GOWER: Mind-blowing. During a pandemic.
Delivering honest news and information in the RE industry
ADAM GOWER: What was the value that you were providing to your readership that warranted - that they saw it, there was enough of it that they wrote you a check every month.
OREST MANDZY: In commercial real estate and in a lot of industries, it's - you develop a reputation. So, I used to talk to a lot of people on a regular basis that they knew me and they got very comfortable with my sort of ability to write honest news, news and information. I would provide them sort of genuine stuff. You know, this is what happened: XYZ bought this property for this much money. They got financing from this party. This was the cap rate and whatever. And they trusted me. So, we were able to sell them subscriptions and based on the fact that they were comfortable with the information that we were providing. If you try to sell junk, eventually it's going to hit you in the face and you're not going to sell much of it.
ADAM GOWER: Right.
OREST MANDZY: We've always tried to sell the best information you could find at our price point. Well, best information you could find, period.
Incredible growth of crowdfunding to raise capital
ADAM GOWER: So in the world that you live in, and I asked you about your audience a little earlier. When you think about that audience, what do you think is their perception of crowdfunding? What is the reputation and how do people see it today?
OREST MANDZY: I think it's getting more and more accepted. And it's hard to say whether it's slowly being accepted or it's quickly getting accepted. I think the latter. I think they're more inclined to embrace crowdfunding. Early on, maybe less than two years ago, I spoke to a sponsor, to a developer, who had crowdfunded some of the equity they needed for a transaction. And his takeaway was: it was great because we got access to investors we never would have touched before. The problem was, it took awhile to close. So, he was able to close with his regular syndicated clients in a matter of a couple of weeks, and it took five or six weeks to close through the crowdfunding. But, I think that lag is going away. This morning CrowdStreet announced a transaction. They raised a ton of money. I think it was 15 million dollars for a transaction.
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