As part of its commitment to help more individuals capitalize on high-potential opportunities in the U.S. commercial real estate market, EarlyShares recently welcomed a group of international investors into a retail investment offering from Saglo Development Corporation.
Nine Brazilian investors pooled $930,000 into EarlyFund-BR Central Plaza, LLC – an EarlyShares-managed investment vehicle – which was then injected into the Central Plaza Shopping Center equity offering.
The transaction is a signifier of growing interest among international investors (specifically Latin American investors) in U.S. commercial real estate.
“When we launched the EarlyFund-BR, we aimed to raise $500,000,” said EarlyShares Co-Founder & CSO Heather Schwarz-Lopes. “We had to increase the cap just to meet demand. We received $930,000 in commitments in just two weeks.”
“We see it as indicative of the potential for international investors to play a major role in the future of U.S. real estate crowdfunding,” Schwarz-Lopes continued.
The trend of international investor activity fueling the recovering U.S. real estate market is nothing new, especially in EarlyShares’ Miami headquarters. Real estate development is booming in South Florida, and a 2014 study found that 90 percent of the demand for new condos in Miami’s Brickell, Downtown, and Edgewater neighborhoods was from foreign buyers. More than six in 10 pre-sale buyers come from Latin America.
Fueling the trend is the desire of wealthy Latin Americans to allocate money into sound investments.
“For many South American buyers, the main motivation for purchasing real estate in the USA is their intent to make a secure investment,” said Oliver Ruiz, managing parter of the Engel & Völkers agency, on Inman.com. “The stable political and economic climate in the country makes it an appealing location for investments.”
Largely, recent international investment activity in U.S. real estate has been limited to the residential market. But not all non-U.S. investors want (or are able) to put up the cash to purchase a condo or single-family home outright. On platforms like EarlyShares, real estate crowdfunding provides a new avenue for such investors.
“Before the JOBS Act Title II exemption took effect, international investors couldn’t easily access commercial deals in the $1-$50 million range,” says Schwarz-Lopes. “EarlyShares is using Title II to provide them with a unique new wealth generation opportunity.”
The success of the $930,000 EarlyFund stemmed from a multitude of factors. For one, it offered Brazilian investors the opportunity to become direct owners in an existing, cash-flow generating Florida shopping center with national corporate tenants. The Central Plaza sponsor, Saglo Development Corporation, boasts a strong record investor returns and offered them quarterly distributions to Central Plaza investors.
EarlyShares’ process also played a huge role. Not only had EarlyShares and its partners carefully vetted the Central Plaza offering – giving investors confidence in the deal’s viability and potential – but Schwarz-Lopes and colleagues coordinated with the individual investors’ attorneys, CPAs, and other advisors to ensure the transaction closed smoothly. EarlyShares will serve as the professional investment manager of the EarlyFund.
“Ultimately, we made it easy for the Brazilian investors to take advantage of the deal,” says Schwarz-Lopes, who foresees continued interest from investors in Latin American countries as the commercial real estate market in the U.S. grows.
“International investments in commercial deals will become a huge part of the real estate crowdfunding industry in coming months, and EarlyShares is one of few platforms at the forefront of the trend,” continued Schwarz-Lopes. “We’re excited to help make these investments happen.”