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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: mspringer on April 23, 2019, 11:38:08 AM

What I am disappointed in is my direct question to them was how much money has been given to FG to this point for this project.  While I did receive a direct email response from RS on this email string, it was simply a copy and paste of the update that was posted publicly as well as a message that this was all the info they have at this time.  I understand the person who is sending me the email probably does not have any additional information.  But I would be very disappointed if RealtyShares did not have an understanding of how much money they have given to FG for this project and how much, if any, they have left in reserve.  I have not received a monthly distribution since January, so maybe that is my answer?

I had written to them asking the exact same thing about my FG deal multiple times, most recently in mid-March.  Then, this Saturday, I received a reply from contact@realtyshares.com asking whether I had heard back from the asset manager on the issue.  I replied in the negative, and the person wrote back saying they would nudge the asset manager again.  Sounds like the asset manager would rather not disclose this profound secret.

Mark

Quote from: ramesh on April 23, 2019, 08:51:59 AM
Quote from: mspringer on April 23, 2019, 08:17:32 AM
Here's what was just posted on Franchise Growth's Church's Chicken in Apopka, FL.  So it looks like there is a standard update across all of their investments.

The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share.

Yes, verbatim language in the notification this morning for Church's@Westminster, CO, another Franchise Growth deal.

Same language in a notification I received for Church's Chicken in North Carolina.

barnold24

Just got my two distributions yesterday after a month and half so hopefully they are catching up. Now if we can just get our K-1's then I will be happy

DECA

I am relatively new to this forum.  I note that at least four FG deals have recently had the same word-for-word update posted by RS on its website -- which I find curious and disturbing.  Does anyone have any FG deal that is currently performing?  I see some people have gotten distributions, but are those on FG deals?  I believe that RS owes us an explanation about what is going on with FG.

kt1984

The folks at RS definitely owe us an explanation around what is happening with FG. John- what happened to the deal in which the restaurant was shut down? Did you get a similar update?

REI

I finally got distributions from a Preferred equity deal - after a delay of 6 months (even though the Sponsor has been paying out promptly). But I am happy this matter finally got sorted out! It was basically erroneous record keeping on RS' part. But it looks like operations are slowly getting back on track, ever since RS has contracted Assure. I believe this happened in Feb, and Assure has been getting the books in order since then (based on my chat with one of their reps).

As for the FG deals, I am in 2 of those (both are debt deals) and  there have been no interest payments since Jan. I got notifications from RS just a couple of days back, saying they are in discussions to get things sorted out (apparently FG is in talks with outside investors to buyout the loans). So it looks like the asset management side at RS is doing their best, so I am being patient.

Overall, I feel being patient is the best strategy right now. But for sure I think RS would do well to communicate the current/future state with all of us in a clear and transparent manner, by responding to John_PVF's letter to RS' CEO (which I hope all of you have signed).

groovydude

REI - How do you know that the sponsor had been making payments for 6 months? Just curious.

Can you share more of the conversation you had with the Assure rep?

dwengca

I noticed this pattern with RS, at least with my own investments.

In Dec, I received zero distribution from my 17 investments on RS.

In Jan, I received distributions from most of my "performing" investments

In Feb, I received almost nothing

In March, I received distributions from most of  of my performing investments

In April, as of today, I received nothing...


It's almost like RS is some overwhelm with handling our investments that they can only or have enough cycle to process payments every other month.   Is it just me or are you guys seeing the same thing?

Thanks!

Hindsight2020

My experience is different. After falling off a cliff in January, my distributions have risen every month this year (including one paying 3 months of catchup in April) and all 8 of my performing assets are current (one of which is accruing interest payments).

The three that haven't paid since December are two Franchise Growth investments (Dog Haus in Decatur, IL and Taylor, MI), and Utah Diversified Residential Fund II. Waiting to hear more on them along with everyone else.

On 4/23 I was notified that my investment in Peachtree Medical Office Portfolio in Atlanta, GA paid off fully on 4/22 (18 months ahead of the maturity), including the accrued preferred return, and that proceeds would be distributed imminently. This is a high-quality asset that had over $3 million of equity behind the RS tranche.


DECA

As I read the comments, I keep seeing Franchise Growth (FG) deals that are not performing (and all appear to have stopped performing around December or January).  Does anyone have an FG deal that is performing?

At least five FG deals had an identical notification by RS on April 22.  Those five and the notification are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
American Family Care – West Islip, NY
Captain D's – Shelbyville, KY

"The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share."

Additionally, FG's Dog Haus deals in Decatur, IL and Taylor, MI are not performing since December according to the above post.  So that makes seven.  For investors in those deals, have the RS notifications been different from the above?  Have they had any meaningful information?

I have tried contacting RS about my concerns about FG, but so far have not gotten a response. If anyone has an FG deal that is performing, please let us know. (Or if there are more non-performing FG deals that I've missed, please update us on those.)

Sdb

Received the same notification on :

Church's Chicken, Deland, Florida
American Family Care, Largo, Florida

REI

Quote from: groovydude on April 25, 2019, 02:09:44 PM
REI - How do you know that the sponsor had been making payments for 6 months? Just curious.

Can you share more of the conversation you had with the Assure rep?


Groovydude,

I noticed (back in Oct/Nov) the distributions for this Preferred equity deal did not show up in my bank a/c, despite a notification on my dashboard. I had been following up with RS ever since, and they finally admitted  the mistake was on their end (and that the Sponsor had actually been promptly paying out). This email was in Feb, but they still didn't release any of my distributions (which accumulated by then).

Upon more follow up emails, I finally got an email from Assure in early April & they followed it up with a call - during which I went over the entire history of this matter. It is only after that did I get all the reconciled distributions (Oct - March). In that chat, the Rep mentioned that they have been busy since end-Feb, to get the books in order & are right now busy working on K1s.

Hopefully from now on the distributions/back office operations should be smooth - fingers crossed! Having said that, and to be clear, Assure is in-charge of these types of operations aspects only, they still need RS' sign-off before distributions are made to us & needless to mention, the asset management is still very much RS' responsibility. In my opinion, this is a good development, where RS can focus on the core elements of each deal (such as recovering our investments from the likes of FG!), and leave Assure to focus on the back office stuff.

groovydude

Quote from: REI on April 27, 2019, 12:58:05 PM
Quote from: groovydude on April 25, 2019, 02:09:44 PM
REI - How do you know that the sponsor had been making payments for 6 months? Just curious.

Can you share more of the conversation you had with the Assure rep?


Groovydude,

I noticed (back in Oct/Nov) the distributions for this Preferred equity deal did not show up in my bank a/c, despite a notification on my dashboard. I had been following up with RS ever since, and they finally admitted  the mistake was on their end (and that the Sponsor had actually been promptly paying out). This email was in Feb, but they still didn't release any of my distributions (which accumulated by then).

Upon more follow up emails, I finally got an email from Assure in early April & they followed it up with a call - during which I went over the entire history of this matter. It is only after that did I get all the reconciled distributions (Oct - March). In that chat, the Rep mentioned that they have been busy since end-Feb, to get the books in order & are right now busy working on K1s.

Hopefully from now on the distributions/back office operations should be smooth - fingers crossed! Having said that, and to be clear, Assure is in-charge of these types of operations aspects only, they still need RS' sign-off before distributions are made to us & needless to mention, the asset management is still very much RS' responsibility. In my opinion, this is a good development, where RS can focus on the core elements of each deal (such as recovering our investments from the likes of FG!), and leave Assure to focus on the back office stuff.

Thanks for the info REI. This is the first tangible proof I've seen that RS has unloaded their "back end", as you call it. It's relieving that some deposits are showing up, but annoying as heck that they're not referenced at all and if distribution notifications are being posted on the site it's slow and random.  Any idea if posting notifications is the responsibility of Assure?

It's encouraging to me that they called you, but I'm still skeptical about the operation as a whole, my fingers are triple crossed!  I did, however, receive an email on Friday from someone new at RS (Merrene Caines - previous emails had been from Juan Carlos), but the email simply restated what's already been posted on the RS site regarding the two problematic investments of mine. I'm not sure if the new staffer is a good sign or a bad one.

Hindsight2020

Quote from: DECA on April 27, 2019, 10:39:47 AM
As I read the comments, I keep seeing Franchise Growth (FG) deals that are not performing (and all appear to have stopped performing around December or January).  Does anyone have an FG deal that is performing?

At least five FG deals had an identical notification by RS on April 22.  Those five and the notification are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
American Family Care – West Islip, NY
Captain D's – Shelbyville, KY

"The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share."

Additionally, FG's Dog Haus deals in Decatur, IL and Taylor, MI are not performing since December according to the above post.  So that makes seven.  For investors in those deals, have the RS notifications been different from the above?  Have they had any meaningful information?

I have tried contacting RS about my concerns about FG, but so far have not gotten a response. If anyone has an FG deal that is performing, please let us know. (Or if there are more non-performing FG deals that I've missed, please update us on those.)

The Decatur, IL loan received the same notice noted above.

The Taylor, MI loan reached a repayment deal for 91 cents on the dollar on 3/5. The papers were signed and notarized on 3/21, and we were told they hoped to close within a week. On 4/15 we received this notice:

"The sale has been delayed by approximately 30 days. The transaction has gotten a little more complicated. The buyer is still committed to the sale but the buyer indicated that they would be rolling this loan up with others in a package and the equity for the purchase needs to be moved from South America. RealtyShares will update you if the situation changes." 

There have been no subsequent updates. I have no idea why it would take 30 days to move cash from South America to the US, but that's what we were told. I assume the other loans referred to in the 4/15 Taylor, MI disclosure are some or all of the ones you listed above. It should be noted, too, that RS still has about 55% of the original Taylor, MI loan in its possession. The restaurant was never built. FG is only repaying 81% of the loan drawdown.

Hindsight2020

Quote from: groovydude on April 28, 2019, 09:54:05 AM
Quote from: REI on April 27, 2019, 12:58:05 PM
Quote from: groovydude on April 25, 2019, 02:09:44 PM
REI - How do you know that the sponsor had been making payments for 6 months? Just curious.

Can you share more of the conversation you had with the Assure rep?


Groovydude,

I noticed (back in Oct/Nov) the distributions for this Preferred equity deal did not show up in my bank a/c, despite a notification on my dashboard. I had been following up with RS ever since, and they finally admitted  the mistake was on their end (and that the Sponsor had actually been promptly paying out). This email was in Feb, but they still didn't release any of my distributions (which accumulated by then).

Upon more follow up emails, I finally got an email from Assure in early April & they followed it up with a call - during which I went over the entire history of this matter. It is only after that did I get all the reconciled distributions (Oct - March). In that chat, the Rep mentioned that they have been busy since end-Feb, to get the books in order & are right now busy working on K1s.

Hopefully from now on the distributions/back office operations should be smooth - fingers crossed! Having said that, and to be clear, Assure is in-charge of these types of operations aspects only, they still need RS' sign-off before distributions are made to us & needless to mention, the asset management is still very much RS' responsibility. In my opinion, this is a good development, where RS can focus on the core elements of each deal (such as recovering our investments from the likes of FG!), and leave Assure to focus on the back office stuff.

Thanks for the info REI. This is the first tangible proof I've seen that RS has unloaded their "back end", as you call it. It's relieving that some deposits are showing up, but annoying as heck that they're not referenced at all and if distribution notifications are being posted on the site it's slow and random.  Any idea if posting notifications is the responsibility of Assure?

It's encouraging to me that they called you, but I'm still skeptical about the operation as a whole, my fingers are triple crossed!  I did, however, receive an email on Friday from someone new at RS (Merrene Caines - previous emails had been from Juan Carlos), but the email simply restated what's already been posted on the RS site regarding the two problematic investments of mine. I'm not sure if the new staffer is a good sign or a bad one.

FYI, Merrene Caines isn't new. I've received emails from her before, at least one of which was from 2018.

mspringer

Quote from: Hindsight2020 on April 28, 2019, 10:08:39 AM
Quote from: DECA on April 27, 2019, 10:39:47 AM
As I read the comments, I keep seeing Franchise Growth (FG) deals that are not performing (and all appear to have stopped performing around December or January).  Does anyone have an FG deal that is performing?

At least five FG deals had an identical notification by RS on April 22.  Those five and the notification are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
American Family Care – West Islip, NY
Captain D's – Shelbyville, KY

"The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share."

Additionally, FG's Dog Haus deals in Decatur, IL and Taylor, MI are not performing since December according to the above post.  So that makes seven.  For investors in those deals, have the RS notifications been different from the above?  Have they had any meaningful information?

I have tried contacting RS about my concerns about FG, but so far have not gotten a response. If anyone has an FG deal that is performing, please let us know. (Or if there are more non-performing FG deals that I've missed, please update us on those.)

The Decatur, IL loan received the same notice noted above.

The Taylor, MI loan reached a repayment deal for 91 cents on the dollar on 3/5. The papers were signed and notarized on 3/21, and we were told they hoped to close within a week. On 4/15 we received this notice:

"The sale has been delayed by approximately 30 days. The transaction has gotten a little more complicated. The buyer is still committed to the sale but the buyer indicated that they would be rolling this loan up with others in a package and the equity for the purchase needs to be moved from South America. RealtyShares will update you if the situation changes." 

There have been no subsequent updates. I have no idea why it would take 30 days to move cash from South America to the US, but that's what we were told. I assume the other loans referred to in the 4/15 Taylor, MI disclosure are some or all of the ones you listed above. It should be noted, too, that RS still has about 55% of the original Taylor, MI loan in its possession. The restaurant was never built. FG is only repaying 81% of the loan drawdown.


2020: Where did you get the info on loan drawdown?  I've been asking about this for the Church's Chicken in Apopka, FL for months and just get an answer that they will pass that question along.

Hindsight2020

#536
Quote from: mspringer on April 29, 2019, 06:57:42 AM
Quote from: Hindsight2020 on April 28, 2019, 10:08:39 AM
Quote from: DECA on April 27, 2019, 10:39:47 AM
As I read the comments, I keep seeing Franchise Growth (FG) deals that are not performing (and all appear to have stopped performing around December or January).  Does anyone have an FG deal that is performing?

At least five FG deals had an identical notification by RS on April 22.  Those five and the notification are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
American Family Care – West Islip, NY
Captain D's – Shelbyville, KY

"The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share."

Additionally, FG's Dog Haus deals in Decatur, IL and Taylor, MI are not performing since December according to the above post.  So that makes seven.  For investors in those deals, have the RS notifications been different from the above?  Have they had any meaningful information?

I have tried contacting RS about my concerns about FG, but so far have not gotten a response. If anyone has an FG deal that is performing, please let us know. (Or if there are more non-performing FG deals that I've missed, please update us on those.)

The Decatur, IL loan received the same notice noted above.

The Taylor, MI loan reached a repayment deal for 91 cents on the dollar on 3/5. The papers were signed and notarized on 3/21, and we were told they hoped to close within a week. On 4/15 we received this notice:

"The sale has been delayed by approximately 30 days. The transaction has gotten a little more complicated. The buyer is still committed to the sale but the buyer indicated that they would be rolling this loan up with others in a package and the equity for the purchase needs to be moved from South America. RealtyShares will update you if the situation changes." 

There have been no subsequent updates. I have no idea why it would take 30 days to move cash from South America to the US, but that's what we were told. I assume the other loans referred to in the 4/15 Taylor, MI disclosure are some or all of the ones you listed above. It should be noted, too, that RS still has about 55% of the original Taylor, MI loan in its possession. The restaurant was never built. FG is only repaying 81% of the loan drawdown.


2020: Where did you get the info on loan drawdown?  I've been asking about this for the Church's Chicken in Apopka, FL for months and just get an answer that they will pass that question along.

In August or September of 2018 when RS was still operating and fully staffed, I discovered through my own due diligence that the restaurant construction was cancelled around April 2018. They never told investors so I was understandably furious and confronted them about it. Amy Kirsch told me at that time that RS still had over 50% of the loan in their possession. The exact amount was provided in the 3/5 notice discussed in my prior post.

mspringer

Quote from: Hindsight2020 on April 29, 2019, 07:57:05 AM
Quote from: mspringer on April 29, 2019, 06:57:42 AM
Quote from: Hindsight2020 on April 28, 2019, 10:08:39 AM
Quote from: DECA on April 27, 2019, 10:39:47 AM
As I read the comments, I keep seeing Franchise Growth (FG) deals that are not performing (and all appear to have stopped performing around December or January).  Does anyone have an FG deal that is performing?

At least five FG deals had an identical notification by RS on April 22.  Those five and the notification are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
American Family Care – West Islip, NY
Captain D's – Shelbyville, KY

"The discussions with the borrower regarding bringing in outside investors to buy this loan have moved forward and we are working to complete our due diligence, including determining a final value for a buy-out. We will give this process 30-days to finalize transaction terms. We will begin to foreclose if, after 30-days, we believe we are not close to a deal. RealtyShares will update you when we have additional relevant information to share."

Additionally, FG's Dog Haus deals in Decatur, IL and Taylor, MI are not performing since December according to the above post.  So that makes seven.  For investors in those deals, have the RS notifications been different from the above?  Have they had any meaningful information?

I have tried contacting RS about my concerns about FG, but so far have not gotten a response. If anyone has an FG deal that is performing, please let us know. (Or if there are more non-performing FG deals that I've missed, please update us on those.)

The Decatur, IL loan received the same notice noted above.

The Taylor, MI loan reached a repayment deal for 91 cents on the dollar on 3/5. The papers were signed and notarized on 3/21, and we were told they hoped to close within a week. On 4/15 we received this notice:

"The sale has been delayed by approximately 30 days. The transaction has gotten a little more complicated. The buyer is still committed to the sale but the buyer indicated that they would be rolling this loan up with others in a package and the equity for the purchase needs to be moved from South America. RealtyShares will update you if the situation changes." 

There have been no subsequent updates. I have no idea why it would take 30 days to move cash from South America to the US, but that's what we were told. I assume the other loans referred to in the 4/15 Taylor, MI disclosure are some or all of the ones you listed above. It should be noted, too, that RS still has about 55% of the original Taylor, MI loan in its possession. The restaurant was never built. FG is only repaying 81% of the loan drawdown.


2020: Where did you get the info on loan drawdown?  I've been asking about this for the Church's Chicken in Apopka, FL for months and just get an answer that they will pass that question along.

In August or September of 2018 when RS was still operating and fully staffed, I discovered through my own due diligence that the restaurant construction was cancelled around April 2018. They never told investors so I was understandably furious and confronted them about it. Amy Kirsch told me at that time that RS still had over 50% of the loan in their possession. The exact amount was provided in the 3/5 notice discussed in my prior post.

2020: thanks for the explanation and obviously it would be nice if RS could provide this info for our investments as well.

Hindsight2020

I think the least they could do is provide you with that information to mitigate the uncertainty.

DECA

RS just posted an update on the FG deal for Louisville MSA Captain D's in Shelbyville, KY.  While not encouraging in where this is headed, it is encouraging that it is the most detailed and non-generic report I've seen from RS on my investments.

"This property has been actively for sale since September 2018.  While we hope the sale is successfully concluded, we are considering selling the loan as the possibility of a successful sale at the list price seems improbable and may not result in the highest net proceeds. We have received a number of investor emails inquiring about the potential loan sale. We are currently conducting due diligence to determine if a loan sale is the best option to recover maximum invested funds.  The borrower reports that although the franchisee still holds the lease for this location, this franchisee has closed at least one other location after less than one year of operation. The restaurant is not open because construction is not complete, and significant capital is needed to finish.  We are obtaining current financial statements from the franchisee, determining the status of construction and the costs to complete, and are hiring an appraiser to determine both the "as-is" and "as-stabilized" values of the property. Once the due diligence is complete, we will be in a better position to negotiate the loan sale or if negotiations fail, foreclose. RealtyShares will update you when we have additional relevant information to share."

Also, to update my prior list of FG deals with responses from a couple of you, there are at least nine non-performing FG deals (listed below).  So far, no one has cited a performing FG deal.  If anyone has one, please let us know.

The non-performing FG deals (the first eight of which had the same notice from RS on April 22 about allowing 30 days for loan buyout terms to be determined and then, if unsatisfactory, beginning foreclosure) are:

Church's Chicken – Apopka, FL
Church's Chicken – Westminster, CO
Church's Chicken – North Carolina
Church's Chicken – Deland, FL
American Family Care – West Islip, NY
American Family Care – Largo, FL
Captain D's – Shelbyville, KY
Dog Haus – Decatur, IL
Dog Haus – Taylor, MI

If anyone has any other FG deal updates, please let us know. It is still concerning to have such a consistent pattern of failed deals and calls into question RS' due diligence on FG as well FG's due diligence on the franchisees.