The Confluence of Real Estate Capital with Technology [June Breakfast Recap]

all speakersOn Wednesday, NAIOP WA State interacted with a panel from CrowdStreet, Inc., their sponsors Scanlan Kemper Bard and SMARTCAP, and Stoel Rives LLP about online real estate investment, which is experiencing exponential growth. The online investment market allows for a diversity in investment profiles, potentially higher gains, and an increase of available analytical data. Molly Moore, CMO from CrowdStreet, moderated the panel where they talked online investment and legal implications and regulations.

Mary P. Hull, a Partner at Stoel Rives LLP, gave a brief introduction on the legal landscape explaining whether it is legal to raise capital for commercial real estate online (yes), and going over the ins and outs of the Jobs Act 2012, Angel List of 2010, and general securities laws such as Rule 506(b) and 506(c).

SMARTCAP Group Founder & CEO, Tim Shoultz talked about their 200+ investors working with unique investment pools actively looking to invest and broadening their market beyond tech with their work with CrowdStreet. SMARTCAP is a highly transparent, self-service platform for online real estate investment that focuses on value-add office buildings and retail centers.

Todd Gooding, President and Principal from ScanlanKemperBard (SKB), talked about the profiles of traditional and new investors, highlighting the benefits and importance of the need for the diversity of both. SKB is a privately-held real estate merchant bank based in Portland, Oregon for accredited investors.

Darren Powderly, Co-Founder of CrowdStreet, talked a bit about the profile of their 100,000+ investors who are typically highly educated, savvy with commercial real estate investment, and have a background in the tech field. Education is a core service for the company as they don’t provide advice, leaving the investor to make their own decisions with the robust information given. The company also appeals to “everyday investors” who are looking for better access to CRE investment and only 3% of applicants are accepted after the rigorous vetting process.

A question was posed about the future of online fundraising and Darren talked about the advantages of more choice in funds that online investment can provide as well as the practice becoming more institutionalized. Tim agreed and said that the barriers to entry would be more difficult, track records would go a long way, and there would be more opportunities to utilize data to the investor’s advantage.

In response to whether there would be a downturn in online investment, Todd replied that having pre-existing relationships and knowing the risk with investors helps in any downturn as well as having the right capital stack. Darren made the point that investments can help preserve and build wealth and, aptly, that it’s not if a downturn will happen, but when.

Tim made the point that, as they predicted two years ago, the Seattle market has more competition, but that if you are willing to put in the work, have patience, and use data to drive decisions, you can find the diamonds in the rough.

All panelists agreed that digital currency is too volatile to use right now for investments and currencies like bitcoin have no tax savings so there isn’t a smart way to use them as an investment tool at this point in time.

The session ended with more questions from the audience…and perhaps with a few logging into the world wide web to make their next commercial real estate investment.

Be sure to check out the slides from the morning’s presentation by going to the NAIOP WA State app. Look for the paperclip icon (materials) for the 2018 June Breakfast.

If you have not yet downloaded the app, you can search for NAIOP Washington State in the Google or Apple app stores or click here. Your login is your email address and password, which is set to your last name unless you have changed it. To update your password, click here to request a password reset link or contact [email protected].

This article was written by NAIOP Washington State and Marketing Communications Committee member Sarah D. Fischer of CallisonRTKL.

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