Can eREITs Compete With Private Equity Funds?

LOS ANGELES—Crowdfunded REITs, known as eREITs, are on their way to competing with large private equity funds. While RealtyMogul.com launched their version of an eREIT earlier this week, early eREIT adopter Fundrise is seeing soaring success with its eREIT products. Since launching the crowdfunded REIT last year, Fundrise has managed to snag 70% of the Reg A+ market, with $70 million of total investment dollars. Now, it is announcing a new partnership with an company that has worked with Black Rock and Morgan Stanley, marking an official foray into the large private equity market.

“The big news for us has been that the first two eREITs that we put forward are almost fully committed in terms of their investments, and the total dollars raised at this point, as of our last public filing, has more than $70 million,” Brandon Jenkins, COO of Fundrise, tells GlobeSt.com. “If you look at the reports that have been put out by the SEC in terms of the Reg A+ industry, that amount is 70% to 75% of the money that has been raised in the entire Reg A+ industry.”

The firm's new partnership with the undisclosed company is a huge step for the firm, which has aimed to compete with these giants. “For us, we have finally gotten to that point, which we have always been aiming towards, which is to be really competing with the biggest private equity funds in the world as a capital provider,” adds Jenkins. “That is something that we set out to do and have always talked about. When people talk about crowdfunding, they said that is would never compete with the private funds of the world. So, for us, this was really a milestone in our process.”

None of this would be possible without the newly adopted Reg A+ regulation from the SEC, which allows unaccredited investors to invest in these types of funds. As soon as the regulation was passed, Fundrise was ready with this eREIT product. “That was huge for us. We always believed that it would put us on a new growth trajectory, but we have definitely been blown away by the rate of adoption and the general interest,” adds Jenkins. “We have tens of thousands of people that join the waitlist to invest, and when we open investment windows, we get thousands of people investing. A lot of times those windows will sell out in a matter of hours. That has been really exciting to see, and it was great validation of our belief that taking great quality investments directly to the public would see a big demand.”

Today, the firm has two eREITs, both of which are nearly fully committed. There are also more innovations on the way, but Jenkins was not able to disclose any information at this time.

LOS ANGELES—Crowdfunded REITs, known as eREITs, are on their way to competing with large private equity funds. While RealtyMogul.com launched their version of an eREIT earlier this week, early eREIT adopter Fundrise is seeing soaring success with its eREIT products. Since launching the crowdfunded REIT last year, Fundrise has managed to snag 70% of the Reg A+ market, with $70 million of total investment dollars. Now, it is announcing a new partnership with an company that has worked with Black Rock and Morgan Stanley, marking an official foray into the large private equity market.

“The big news for us has been that the first two eREITs that we put forward are almost fully committed in terms of their investments, and the total dollars raised at this point, as of our last public filing, has more than $70 million,” Brandon Jenkins, COO of Fundrise, tells GlobeSt.com. “If you look at the reports that have been put out by the SEC in terms of the Reg A+ industry, that amount is 70% to 75% of the money that has been raised in the entire Reg A+ industry.”

The firm's new partnership with the undisclosed company is a huge step for the firm, which has aimed to compete with these giants. “For us, we have finally gotten to that point, which we have always been aiming towards, which is to be really competing with the biggest private equity funds in the world as a capital provider,” adds Jenkins. “That is something that we set out to do and have always talked about. When people talk about crowdfunding, they said that is would never compete with the private funds of the world. So, for us, this was really a milestone in our process.”

None of this would be possible without the newly adopted Reg A+ regulation from the SEC, which allows unaccredited investors to invest in these types of funds. As soon as the regulation was passed, Fundrise was ready with this eREIT product. “That was huge for us. We always believed that it would put us on a new growth trajectory, but we have definitely been blown away by the rate of adoption and the general interest,” adds Jenkins. “We have tens of thousands of people that join the waitlist to invest, and when we open investment windows, we get thousands of people investing. A lot of times those windows will sell out in a matter of hours. That has been really exciting to see, and it was great validation of our belief that taking great quality investments directly to the public would see a big demand.”

Today, the firm has two eREITs, both of which are nearly fully committed. There are also more innovations on the way, but Jenkins was not able to disclose any information at this time.