CrowdStreet’s Ian Formigle and Thomas McDonald discuss how the current economic uncertainty caused by COVID-19 is impacting the CrowdStreet Blended Portfolio.
CrowdStreet
Ian is a real estate professional and serial entrepreneur with 24+ years of experience in real estate private equity, startups, and equity and options trading. At CrowdStreet, Ian serves as the key decision-maker for all investments on its Marketplace, totaling over 400 offerings and some $13.7 billion of commercial real estate. Ian is the author of “The Comprehensive Guide to Commercial Real Estate Investing” and he is a contributing author at Forbes.com.
Prior to joining CrowdStreet, Ian was VP of Business Development for ScanlanKemperBard Companies, where he managed the firm’s alternative investment platform and served as a senior acquisitions officer on a team that acquired some $500 million of commercial real estate assets during his tenure. Previously, Ian co-founded and served as CEO of Clarus Property Ventures, a regional real estate private equity firm that focused on multifamily acquisitions. Ian began his career as an equity options market maker and member of the Pacific Exchange. Ian holds a BA in Economics and a BA in Political Science from the University of California at Berkeley and has held numerous securities licenses including Series 7 and 63.
00:01:20 Sounds great.
00:01:22 Okay, here we go. Question number one, for those series that are substantially invested, what defensive moves is CrowdStreet taking with the remaining cash?
00:01:33 Very important question. Um, Ian, uh, hello everyone. Thomas McDonald here, uh, investment Product Manager of CrowdStreet. Um, we're gonna make a couple changes, Ian. Uh, the first we're gonna increase reserves from 50 basis points to 250 basis points of a u m. Uh, we're also gonna temporarily suspend distributions and also accrue our management fee until such time we pay those distributions
00:01:56 Again. Okay. Thomas, second question. For those series that are either just beginning to invest or even still fundraising, how will those series of the blended portfolio look different than previous series?
00:02:11 Great question, Ian. Uh, for those series that recently closed, uh, we're still gonna make a couple changes. Uh, we're gonna increase the reserves from 50 basis points to 250 basis points. Uh, we're also gonna extend the investment period for 12 to 14 to 12 to 14 months. Um, you know, in both cases we've gone out to investors asking further consent. Uh, if they vote to consent to move forward, we're gonna make those changes right away. Um, in addition, I suspect we're gonna see a barbell effect. Uh, we should anticipate seeing some more core plus offerings and opportunistic offerings. Um, I think in either case, in order for a marketplace offering to get a approved these days, um, those sponsors are really gonna have to take into consideration the new economics in today's recessionary environment, uh, and make sure that the deal still makes sense.
00:02:59 Yep. I definitely agree with you Thomas. Uh, we are already starting to see the marketplace evolve rapidly, uh, as we move into the post covid 19 environment. Um, so going forward, we definitely expect series six to look more opportunistic in nature than previous series. Uh, and so that's gonna be it for today. Uh, hope this quick video was informative. Uh, please know that we're gonna come back to you with more videos as early as next week. Uh, for our next, uh, installment, we're gonna talk to Malcolm Davies, who is a principal and managing director at George Smith Partners. He's gonna give us a full capital markets update, so you definitely want to tune in for that one. Uh, and in the meantime, everyone, um, stay safe. We'll be back to you soon.