Crowdfunding Property News Update
Crowdfunded REIT floats on AIM
The first successful exit from a UK crowdfunded company.
Mill Residential REIT listed on the crowdfunding platform Syndicate Room last year, raising over £2 million. Since then it did as promised and listed on the Alternative Investment Market in London. Investors who sold upon flotation would have banked a 11.5% profit in under a year. According to this article most chose not to sell. You can check the share price with the ticker LON:MRR
Amusingly a row has since broke out between Syndicate Room and a rival platform Seedrs about who got the first UK IPO.
“Their (Seedrs) claims are utterly nonsense and I’ve got in touch with them about it”
Read the details of the spat here.
$1 Billion invested in US Property Crowdfunding
By the end of 2015 that number could be $2.5bn. A couple of high profile crowdfunding projects have boosted interest and investment in the U.S.. Namely Hard Rock Hotel in Palm Springs, California, (which added bonuses to investors such as better room rates) and the 3 World Trade Center skyscraper in Manhattan, New York.
The majority, 75%, of the deals are structured as debt. While this may provide a more secure and reliable rate of return, it limits the upside that is possibly achievable using a profit sharing or capital gains sharing structure. The caveat as always to investing is that any investment can go wrong. Figures from the U.S. show that the percentage of investments that run into trouble is approximately 2%. A failure rate that is described as pretty low in this Forbes article.
An example of some property crowdfunding can be seen at this link. A 10,000 sq ft commercial re-development generating 3.5% during the development and 9-13% when finished.
£3,500 per hour being crowdfunded in the UK
An interesting statistic mentioned in an article by The Telegraph recently.
Crowdfunding is fast becoming the fashionable way for the general public to invest their savings. According to data analysis site The Crowdfunding Centre, 6,561 projects have been launched since the start of last year, with an astonishing £3,500 per hour being raised in the UK alone.
This includes for business investments and I’ve no doubt CrowdCube.com helps raise the lions share of that cash.
The rest of the article lists the caveats of investing then morphs into an infomercial for Property Crowd, a property crowdfunding platform based in Kent in the UK.
“Not all crowdfunding opportunities are created equal, but if you take care to invest in the right one, the rewards can beat anything the banks will offer you.”
If that doesn’t sound too boring read the whole article here.