LOS ANGELES—The largest initial public offering of anyCalifornia company in 2014, Lending Club's $865-million stockmarket debut earlier this month gave it a valuation of $8.5billion, putting it ahead of all but 14 US banks. At the moment,such a bullish entrance for an online lender could occur only inthe consumer segment, but Realty Mogul'sJillene Helman thinks commercial real estate is upnext.

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The key ingredient in online lending's secretsauce is big data, and the Realty Mogul CEO tellsGlobeSt.com the speed and flexibility that automated technologyprovide make it especially apt for this sector. Helman, whose LosAngeles-based company recently signed a $73-million deal withDirect Lending Investments in which the hedge fundwill exclusively provide loans to fix-and-flippers through theplatform, recently sat down with GlobeSt.com to chart theadvantages online lenders can offer compared to traditionalbanks.

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GlobeSt.com: What makes commercial real estate aprime area for a more automated approach as far as lending isconcerned?

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Helman: You're seeing this trend witha lot of different lending capacities: Lending Club and Prosper aredoing it with consumer credit, and you've got OnDeck doing it withsmall business loans. And I think real estate is a natural verticalfor online lending for a couple of reasons. One, it's a really bigmarket. About $300 billion in commercial real estate trades in theUS on an annual basis; there are massive amounts of demand.

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But another one, equally important, is the amount of time ittakes to do those loans. Historically, it has taken 45 to 60 daysto close transactions, because you're pulling documentation andyou're doing underwriting—there's a lot of manual work that goesinto it. Our vision, and the way we've started to build up thecompany, is an automated version of that, taking closing time from45 or 60 days to 30 days or less. Rather than ask a borrower fortons and tons of data, we've the ability to go get that dataourselves through APIs [application program interfaces] and othercomputer methodologies to pull in information.

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I'll give you a small example. Rather than asking our borrowersfor tax returns, we ask for an authorization to get their taxreturns directly from the government. All they have to do is checka box saying that we have authorization, and then we can go pullthose automatically through our technology. So we're streamliningthe process, with the effect that we're able to close a lot faster,and we're also automating a great deal of the underwriting. Ratherthan have human beings underwrite every single piece of the file,we're building technology to do that.

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GlobeSt.com: It stands to reason that another factoris that a lot of buyers, and therefore borrowers, really need tomake things happen more quickly these days, especially given thecompetition for the assets they would be biddingon.

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Helman: Yes, speed is a competitiveadvantage.

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GlobeSt.com: Lending Club recently had a successfulIPO, and OnDeck will be following shortly. Has the success of thesecompanies encouraged the real estate industry to take this formatmore seriously?

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Helman: It provides legitimacy to theidea of online lending. Right now you've got two companies, one ofwhich has IPO-ed and another which is IPO-ing, and it can't be apublic company if it's not real. It says something about the futureof the business, which is that right now we're on a massive growthtrajectory.

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GlobeSt.com: Where do you expect Realty Mogul to begoing in 2015?

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Helman: We're planning on going from30 employees today to over 100, if employee growth is anyindication. We're planning on much higher volume, much higher scaleand the ability to help a lot more people fund a lot more realestate loans.

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GlobeSt.com: In terms of big data's ability toexpedite transactions, where will we see advances over the nextcouple of years?

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Helman: A big part of it is thecollection of the data. One of the reasons that Lending Club gotthe valuation that it did in its IPO was that it had all theseyears of data and payoff history. We're still at the early stagesof that for our company. We have about two years of data, but weneed more volume and more data in order to make our decisionalgorithms smarter.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.