Real estate crowdfunding has been growing exponentially for the past couple years, and this year the industry continues to move from being a niche phenomenon to establishing itself as a legitimate and credible fundraising tool. It has also transformed real estate investing from being a rich man’s preserve to an activity in which the ordinary retail investor could participate. It provides smaller investors the opportunity to directly invest in real estate projects located in their own communities. TimesRealtyNews.com that I write for, as of September 1, 2014, saw $2 billion in real estate crowdfunding affected.
Here we take a look at the top five real estate crowdfunding projects that became doable raising north of $5-$200 million. These are to date some of the largest crowdfunding exercises in the real estate industry, raising the largest sums of money from the crowd:
This planned skyscraper in Bogotá, the first in Colombia in 30 years, will be the tallest building in the country when it opens in 2015. It is 66 stories tall and will offer more than one million sq. ft. including a hotel. The structure was not financed conventionally, but in the largest crowdfunding exercise to date, more than 3,800 Colombian investors contributed more than $170 million in cash. The deal was put together by Prodigy Network.
17 John Street
Prodigy Network closed this deal on September 3, 2014 in downtown New York for a price of $85.3 million of which $25 million was raised through crowdfunding. Accredited investors from 12 states in the US and 10 countries were involved with contributions as low as $50,000. However, this may just be the beginning as the company plans to raise an additional $41 million from crowdfunding to pay for the transformation of the hotel into an extended stay hotel with 191 units over 23 stories. The company says that this is yet another example of providing access to smaller accredited investors to big real estate projects.
84 William Street
The building in lower Manhattan has been acquired by a joint-venture consisting of Korman Communities, Shorewood Real Estate Group LLC, and Prodigy Network and is being renamed AKA Wall Street. A project costing $40 million spread over 15 months will result in a fully furnished building providing extended stay facilities for people visiting New York. The community will consist of 140 suites of different sizes and include amenities such as a cafe and a fitness centre. Of the total project cost of $ 110 million, $ 25 million was crowdfunded from foreign investors belonging to 6 different countries.
Weissenhaus Grand Village Resort & Spa
This planned five-star resort located on the Baltic coast near Hamburg has set a new record for Europe in real estate crowdfunding. Through the crowdfunding platform Companisto, it has raised €4.2 million from more than 800 investors to raise funding for an expansion project. The terms for the crowdfunding include an interest rate of 4% per annum, the share of the rise in property values as well as revenues. The owner Jan Henric Buettner has already invested approximately €65 billion and the resort opened in July 2014. This fundraising is also significant because of the relative lack of venture capital in Germany.
This project involved building a $250 million condo tower on six parcels of land at 90-94 Fulton Street. iFunding raised around $8 million through crowdfunding and plans to raise a further $ 42 million in equity. The building project, which will be around 75 stories tall and provide 250,000 sq. ft. of space, is also believed to have obtained a commitment from a large bank for a construction loan in the range of $150 million – $200 million. The developer is Erin Wickomb’s Mavrix Group.