Today, RealtyMogul.com announced its first REIT officially known as MogulREIT I. This deal is similar to deals we’ve seen in the past that are leveraging Regulation A+ in Title IV of the JOBS Act. They will be able to raise a total of $50 million for the new fund. What is especially interesting about these types of deals is that they allow access to non-accredited investors. We spoke to Jilliene Helman, CEO of RealtyMogul to learn more about the new REIT.
The benefit of a fund versus investing in individual deals is that investors are automatically diversified in a number of different projects. This significantly lowers the barrier to entry for smaller investors. The minimum investment in the fund is $2,500 with no maximum. They aren’t focusing on opening up the fund to retirement accounts yet due to compliance reasons.
Jilliene shared with us that they have a large base of non-accredited investors that they hope to tap into with the new offering. They currently have over 80,000 investors on the platform, but only 30,000 are accredited investors. The remaining 50,000 investors have been prohibited from investing with RealtyMogul until now.
The fund is focused on income producing commercial real estate which means it will be invested in multifamily units, retail, self-storage and office buildings. With a deal like this one of the concerns is the ability to deploy capital quickly. If they were to raise the maximum amount of $50 million there is the potential of cash drag as they source new deals. To alleviate this, RealtyMogul.com has taken a unique approach, enlisting a sub advisor on the fund who can invest in publicly traded real estate related securities. This also provides some liquidity although Jilliene mentioned that investors should have a long-term investment horizon, ideally of at least 3 years. [Read more…]