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Thoughts On RealtyShares Closing Its Doors To New Investors

Started by Sam, November 07, 2018, 11:29:29 AM

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ramesh

Quote from: Beat_The_Fraud on January 24, 2019, 06:25:22 AM
Hi Ramesh

Where exactly do you see the description on Goalz website that they are opening the Church's chicken in Westminster, CO? I have invested in Church's in DeLand, FL and apparently Goalz is the franchise for this one too. But, I don't see any information on their website which mentions the restaurants and their locations opening shortly. Please advice

Thanks

https://www.goalzllc.com/brands/churchs-chicken/

The map  -- hover over the icons -- says that, both, the Westminster, CO and DeLand, FL locations (and a few others) are "coming soon".

It's simply ridiculous that we have to read chicken entrails (so to speak) to gather the most basic info on the status of our investments. 

ramesh

Quote from: John on January 24, 2019, 09:50:04 AM
How is everyone doing on distributions? I received 2 earlier in January but it has been radio silence since then.

Same here.

One of my RS equity investments is the Villas de la Luz deal from Cooper Street Capital (CSC)  initiated in 2018. If anyone else is in this deal here is a tidbit. 

The investment had several hiccups in 2018, though the last report from them in Nov sounded like they had turned the corner.  I reached out to someone at CSC recently, and was told that ".. CSC was able to successfully manage these issues and is in the midst of initiating a liquidity event in order to return your capital back to you plus a healthy return.".

John_PVF

Hello all.  I've been reading all of the reply's but have yet to put forth my $0.02.  Here it is:

My main concern at this point is just getting (as much as possible of) my money back so I can redeploy elsewhere.  The easiest way for that to happen for us deal-level investors is for individual sponsors to recap the underlying assets to replace RS investors.  I'd be willing to take a haircut for that to happen and I suspect others would too just to be done with this.  That obviously will impair the value of the asset mgmt stream RS is currently trying to sell, so how can we push that idea?  Direct sponsor outreach seems the only obvious solution.

I agree with what others have said that RS is just a clearinghouse for payments at this point, and they can't even get that right.  I just got back a distribution that was misapplied to another deal.  I have zero confidence that they will be able to stay on top of sponsors/keep them honest, which is what we paid them to do in the first place.   That is going to fall to us.

I disagree with their statement that paying distributions is the best way to know they still are there.  I sent one email to them right after the announcement and got a boilerplate response, then a second email last week with no response.  The buyers they're courting are presumable only willing to pay something over fire sale price because of the potential client list that comes with and opportunity to cross-sell their other products.  Leaving those clients high and dry in the interim erodes trust further and destroys the value they are trying to monetize in the sale.

We need to hold them to task when material deal terms change without notification.  I invested in an equity deal that was supposed to be a 3-yr target hold, but now is showing 5 years on the dashboard.  I know this stuff happens from time to time, but their communication should be better.

FWIW, here's the deals I'm invested in.  If anyone has any thoughts/ideas for tackling, I'm all ears.

- Slate Apartments
- The Plaza Apartments
- Philadelphia Multifamily Fund VI
- Centre Point Plaza
- Woodcreek Farms

crowd_invest211

Quote from: John on January 24, 2019, 09:50:04 AM
How is everyone doing on distributions? I received 2 earlier in January but it has been radio silence since then.

First of all, thanks for everyone who is sharing information/updates on investments.  I'm glad this forum/thread exists.

I'm in the same boat.  I have 9 active investments with them, and have only received a single distribution earlier this month (which was actually a late Dec distribution), and that was it since mid Dec. last year.

Also received a notification that 1st loan associated with second lien debt is in default (Chicago Retail Second Lien Debt). 
That's already been mentioned in this thread.

I do hope that this is just a pause due to activity with a potential takeover of the assets by a competent acquirer, just trying to be positive in all this!  *fingers crossed*

Also, I'm not holding my breath on the K1s being delivered in a timely manner, most likely will need to file extension for taxes. 

Will also be reaching out to sponsors direct and posting any info here. 

My investments list:

-Little Rock Four Points
-River Ranch Apartments
-Baton Rouge Multifamily Portfolio 2nd Lien Tranche 2
-Detroit MSA Dog Haus and Taco John's Tranche 3
-Church's Chicken Westminster CO
-Seattle Townhomes Predevelopment
-Chicago Retail Portfolio Lockport 2nd Lien Tranche 2
-University of Toledo Student Housing
-Downtown Minneapolis Office

svytraveler

Quote from: John on January 24, 2019, 09:50:04 AM
How is everyone doing on distributions? I received 2 earlier in January but it has been radio silence since then.
Count yourself lucky; no distributions on my 2 investments since early December.

svytraveler

Not sure about collective action, but previously I did get a response and may have prompted a subsequent notification.  I am an attorney and included Esq. behind my name for both messages.  In today's message I wrote that the lack of promised updates (and distributions) may cause investors to believe that RealtyShare Is not exercising due diligence to protect their investments.  The last notification said that RS had referred the property to their foreclosure vendor and promised a 30 day update on the "process."  It is now 50 days and I asked them to share the name of their vendor.  I am actually close enough to the property that I could drive up this weekend and take a look around, though I doubt I'll actually take the time to do that.
Quote from: jy2005 on January 23, 2019, 04:16:26 PM
Hi Sam,

You asked to share negatives. I have RS investments that are now either in default or delayed payments without any explanations. For the defaulted ones, RS has not provided any update for more than 50 days. Emails sent to contact@realtyshares.com simply gone silent. This concerns me a great deal. I am sure I am not the only one.

Is there anything we investor as a group can do to safeguard our investments, rather than passively waiting for bad things happening?

sdnerd

Quote from: John on January 25, 2019, 05:46:49 AM
I only share one investment with you and that's the Detroit MSA DogHaus/Taco John. I discovered before the RS transition through my own due diligence that the restaurant was never built. At the time I discovered this (about September), Amy from IR told me that the sponsor drew down some of the loan to raze the existing structure, but then production ceased. She also told me RS still has more than half of the loan under their control and that the sponsor was trying to sell the cleared lot. I also learned that the project was cancelled in April, something that RS never shared with us. That deal matures in 2 days and obviously they have been radio silent.

Assuming this is all accurate - and I'm not doubting you, I've just lost any and all trust in anything related to RS at this point... it's unbelievable these updates were not provided to investors. I'm sure I'm not alone, but had I known one of the Franchise Growth LLC investments was cancelled, or having major issues I would not have invested in any additional with them. I'm hoping RS really does still have half the total funding. Between that and whatever the land is worth, this better not end up in a 10 cents on the dollar exit.

Interestingly, the Dog Haus website still shows that location as coming soon. Perhaps they simply haven't updated it... but if it was cancelled in April that seems like a big oversight.

The absolute worst form of communication is radio silence; which is the one thing RS is apparently exceptional at.

ramesh

There seems to be a consensus here that the radio silence from RS is disconcerting, and that by alienating investors, it is likely to reduce the value  of RS' servicing rights portfolio.  They are clearly not responding  to individual requests for information, but will a letter signed by all the folks here  elicit a response and some action? Logistics TBD given the anonymity of individuals here. We could discuss what such a letter might say, but speaking for myself, I would like to ask them to explain to the investor collective, what options they are contemplating, and what their timeline is. 

sdnerd

Quote from: John on January 25, 2019, 09:43:18 AM
I've done 3 Dog Haus deals, the one in Rockford, IL that paid off, the one in Decatur, IL that is struggling and needs a rent reduction to survive, and the combo Dog Haus/Taco John in Taylor, MI. The Rockford and Decatur projects posted regular updates with construction photos. Yet they never posted any for Taylor, MI, despite my repeatedly asking them to. That's when I began to get suspicious. I used Google Earth to look at the location and what stores were nearby. There's a Pier 1 next door and I simply called and asked about the state of the restaurant being constructed next door. The woman I spoke with told me they tore down the old structure and after that work stopped and there had been no activity for months. I confronted Amy from IR about it and she provided me with the details about RS still having more than half the proceeds of the loan in their possession. I asked why they couldn't just return that money to us now and hopefully make us whole when they sell the land. She said they were giving the sponsor time to sell the lot since it was already permitted for a restaurant and another chain/franchisee could step in.

I also actually tracked down the developer--American Development Partners--who said all work was halted in April 2018 after they razed the building. He said it was because the sponsor didn't put in the additional equity required for the next loan drawdown. I don't have proof of that but don't know why he would lie to me. It seems like they were supposed to do a lot of additional projects with Franchise Growth LLC and after that the relationship fell apart.

Interesting timing, but they just updated the dashboard with this for the Dog Haus/Taco Johns in MI:

"The borrower is putting a proposal together to potentially pay off the loan. This would involve raising money from other investors. He said he would be back to us in three weeks or so and hopefully have identified an additional investor."

A simple update, but if they just did updates like that on a routine basis as information came in... it would be a huge improvement. That at least gives me some idea as to what is going on vs. complete darkness (from their end).

Sam

FYI, just got an e-mail from Opus Fund Services (https://www.opusfundservices.com/about/) to see my latest account balance for my DME Fund investment.

Anybody else get an e-mail notification? I'm glad they hired a fund services company. Hopefully service will be better with more reinforcements. And hopefully this is a first big step in a positive transition process!

I logged on and it works. They have my appropriate contact info, contracts, quarterly statements through 9/2018, and so forth.

***
Dear Investor,
 
Your statement for the above referenced fund has been posted online.
http://investorportal.opusfundservices.com.
 
If you do not have a username, please visit
http://investors.opusfundservices.com to set up your access.  If you have
any issues, please raise a support ticket and we will contact you within 24
business hours http://investorportalhelpdesk.opusfundservices.com.
 
Sincerely,
                                               
Investor Relations
Opus Fund Services
500 E. Diehl Rd., Suite 100
Naperville, Il 60563
Opus Main Phone: (312) 256-9974

USA: Brentwood CA, Naperville IL, New York NY,
Global: Bermuda, Dublin - Ireland, Halifax - Canada, Manila - Philippines

Opus Fund Services (Bermuda) Ltd. is licensed by the Bermuda Monetary
Authority under the Investment Funds Act 2006
Regards,

Sam

cj60031

I just got this in my e-mail from RealtyShares.

You have a new notification on your RealtyShares dashboard:

Hampton Inn Memphis Collierville 1/25/2019

At least, They are still alive.

ramesh

I just got off the phone with someone who is ex-RS, and has now moved over to another firm that is a RS sponsor.  He says that the new employer perceives a hobbled equity partner as a "financial risk", because they may not be able participate in a potential capital call. This is leading them to consider an early termination of the project by way of a sale — evidently they are in a position to exit profitably.  If this is indeed a factor in the thinking of other financially strong sponsors, it might lead to early project closures or recapitalizations, and an early return of capital.

svytraveler

Quote from: svytraveler on January 25, 2019, 06:46:02 AM
Not sure about collective action, but previously I did get a response and may have prompted a subsequent notification.  I am an attorney and included Esq. behind my name for both messages.  In today's message I wrote that the lack of promised updates (and distributions) may cause investors to believe that RealtyShare Is not exercising due diligence to protect their investments.  The last notification said that RS had referred the property to their foreclosure vendor and promised a 30 day update on the "process."  It is now 50 days and I asked them to share the name of their vendor. 
Quote from: jy2005 on January 23, 2019, 04:16:26 PM
I received a response this afternoon, which said: "I've reached out to our Asset Management team. The foreclosure process continues and they will post an update in the next few days. Our foreclosure vendor prefers that we don't share their contact details so that they may focus on their work without being distracted by individual investor enquiries.  We have had indeed had delays this month with distributions due to both the impact of holidays on our January activity as well as some process changes.  We expect deals that are distributing to do so before the end of the month.  We apologize for the delay and appreciate your patience."


Sam

Quote from: ramesh on January 25, 2019, 04:18:09 PM
I just got off the phone with someone who is ex-RS, and has now moved over to another firm that is a RS sponsor.  He says that the new employer perceives a hobbled equity partner as a "financial risk", because they may not be able participate in a potential capital call. This is leading them to consider an early termination of the project by way of a sale — evidently they are in a position to exit profitably.  If this is indeed a factor in the thinking of other financially strong sponsors, it might lead to early project closures or recapitalizations, and an early return of capital.

Can you clarify your paragraph? What do you mean by joining an RS sponsor? Example please.

Who is a hobble equity partner?

What termination of project?

thx
Regards,

Sam

crowd_invest211

Yep, seems like someone got back into the office at RS today. 

Got an update and quarterly report today regarding Downtown Minneapolis Office:

RealtyShares just received the fourth quarter distribution from the sponsor. The distribution post-RealtyShares management fees result in an annualized cash-on-cash return of 4.9%, this is below underwriting which targeted an 8.7% annualized cash-on-cash return for the first year of operation. It is not unusual for investments to provide lower distributions in the early stages of a business plan when capital improvements are taking place, and catch up thereafter. Once the sponsor submits a payment to RealtyShares, please allow 10-15 business days for ACH disbursements to be processed by RealtyShares.


ramesh

Quote from: Sam on January 25, 2019, 06:08:30 PM
Quote from: ramesh on January 25, 2019, 04:18:09 PM
I just got off the phone with someone who is ex-RS, and has now moved over to another firm that is a RS sponsor.  He says that the new employer perceives a hobbled equity partner as a "financial risk", because they may not be able participate in a potential capital call. This is leading them to consider an early termination of the project by way of a sale — evidently they are in a position to exit profitably.  If this is indeed a factor in the thinking of other financially strong sponsors, it might lead to early project closures or recapitalizations, and an early return of capital.

Can you clarify your paragraph? What do you mean by joining an RS sponsor? Example please.

Who is a hobble equity partner?

What termination of project?

thx

I am quoting this person, and here is what I think he means.

This person has joined a company that is a sponsor that has listed some equity deals  on RS. I am invested in one of these deals -- Villas de la Luz.

The sponsor is aware of the mess at RS.  The RS SPV which has an equity stake in the project of the sponsor, and is managed by RS, is viewed as a weak equity investor because RS is on a weak wicket.

At the time the deal was marketed in early 2018, the sponsor had proposed a three- year business plan, but is now considering an exit by way of a sale.

crowd_invest211

Response from Goalz Retaurant Group regarding Westminster, CO Church's Chicken:
==========================
Hello-

Thank you for your inquiry. We are currently 2-3 months out on the permitting process for the restaurant. We plan to break ground as soon as permitting is completed. Once completed, it will take about 120 days for the restaurant to be built.

We look forward to serving great chicken to the community of Westminster.

Thanks,
Goalz Restaurant Group
==========================

ramesh

Yesterday, I received distributions on Church's Chicken, Westminster, CO and the Camden County MF Portfolio. I also received a notification from Hampton Inn, Colliersville TN saying that they will not be making a Q4 dividend distribution.

kt1984

John are you still getting interest distributions from the Decatur IL, property which has been on sale for a while? Up until now the distributions are still coming from most Franchise Growth LLC properties? Do they come from a reserve which realtyshare holds?

Sam

Ramesh / thx for clarifying. In my opinion, there is no weak equity investor. It is up to the sponsor to make things work, not the minority equity investor. Sounds like a sponsor just want to take advantage of the situation and not do their jobs.



Regards,

Sam