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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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samalamadingdong

I'm glad to hear some have gotten distributions in January/Feb. I heard back from RS and they said they were backlogged from loss of staff. But I wasn't sure if that was just a brush off "the check's in the mail" or if they're actually backlogged. My loan is to Sridhar Properties and nothing's posted since 12/14/18.  :-\

Plimsoll

#241


Paul20,  I am invested in Sutton Square and Kingswood Court.  Both have the same sponsor, Kingswood Court is up to date on distributions, so I think there is hope for Sutton Square to get back on track.

Sdb

While Im not in either of these deals I am invested in another from this sponsor. I'm particularly interested in turnaround multi family. I've spent 20 years in manufactured housing communities with a heavy emphasis on rental units and "struggling" assets. These deals can be lucrative, but require a specific skill set on the part of the owner. It's hard to tell if this sponsor meets that criteria, but those properties should be positioned well if they can pull it off. I did note in the Q3 report that they are looking at a potential sale of these properties.

GA Investor

Does anybody have a way to contact RS other than the contact@realtyshares email address?  I am missing 5 of 6 expected distributions from January and it has been crickets from RS despite multiple emails.  I have also not received any communication from Assure or any other service.

princyraj

Quote from: GA Investor on February 04, 2019, 02:43:26 PM
Does anybody have a way to contact RS other than the contact@realtyshares email address?  I am missing 5 of 6 expected distributions from January and it has been crickets from RS despite multiple emails.  I have also not received any communication from Assure or any other service.

Try realtyshares@assure.co and lets us know if you get any response.

princyraj

#245
I think this is too good to be true :). I got an email from an ex-RS employee who is working at private equity regarding one of my investments in "Villas de la Luz"

********
Hi XXX,

Villas de la Luz ("VDL") is currently under contract to be sold for $25,250,000 which equates to a 27.4% project level IRR.

Since acquiring the asset in January 2018, Villas de la Luz made a significant turnaround under our ownership and management. During the month of acquisition, VDL generated a net operating income of $59,400, far below the property's potential. 

One year later, VDL generated $124,900 of net operating income representing a 110% increase relative to the same month of the prior year. We were able to drive NOI growth by renovating and releasing units which increased the total income by 47% while holding operational expenses below those of the prior ownership.

Over the past year, the property was rebranded through exterior renovations and 46 units were renovated achieving an average per unit premium of $90. Additional non-renovated units were turned over and released at higher desirable market rates. The past year of ownership was not without an unexpected speed bump when our contractor mistakenly hit the main gas line which made us divert capital from our CapEx reserves to resolve this issue. If it were not for this, we would have been able to renovate additional units to further increase the property's income. 

The transaction is anticipated to close in the following weeks and capital will then be sent your investment manager.
***********


********
Hi XXX,

Thank you for getting back to me and I would be happy to keep you in the loop of our future acquisitions. 

I am glad you participated in Villas de la Luz through RealtyShares since this deal is under contract to be sold in the coming weeks.  Once the transaction is completed, your capital will be returned to RealtyShares and then returned to you.

If you are interested in the YYYY Portfolio, we do not anticipate calling capital from investors until the first week of March which does open the opportunity of reinvesting with us.  I would be happy to hold a spot for you in this deal if you are interested and the timing works well for you.
*******

Seems like RS is selling groups of investment to different bidders. At least that's how I am interpreting it. If this is the case its great news for all investors. Keeping my fingers crossed and I will let this group know if this transaction goes through.

EDIT: Villas de la Luz is being Paid off by Cooper Street Capital (Sponsor)... The project had an exit date of 2021. However, its getting sold earlier. The Sponsor in this case happens to be the employer for the ex-RS employee.


ramesh

I am invested in VDL and received the same note.  I don't think this is an instance of RS selling its piece; instead, I think Cooper Street Capital  is selling the property and returning capital to all its investors.  I say this because RS's piece is only $2.5M but the proposed transaction is for $25M.

Having said that I would be happy for this transaction to go through.  The less exposure I have to RS,  the better.

princyraj

Quote from: ramesh on February 05, 2019, 01:22:37 PM
I am invested in VDL and received the same note.  I don't think this is an instance of RS selling its piece; instead, I think Cooper Street Capital  is selling the property and returning capital to all its investors.  I say this because RS's piece is only $2.5M but the proposed transaction is for $25M.

Having said that I would be happy for this transaction to go through.  The less exposure I have to RS,  the better.

Makes sense. The second email clarified it. Agree ..least exposure to RS the better.

swbluedevil

Got this notice today about RealtyShares changing their payment method, which is causing a delay on distributions:

32 Cutting Ave 2/5/2019
02/05/2019
RealtyShares has changed the payment method through which the borrowers pay us resulting in a slight delay in payments. The borrower indicated that he will be wiring the payment today (distribution should occur in the next couple of days) and anticipates refinancing the loan in the next 45 days.



John_PVF

Was the email you got from Cooper Street unsolicited?  if so, how did they get your name and contact info as a deal level RS investor?

I ask because I got an unsolicited outreach today from my former contact at RS to let me know he now works at Cooper Street and to inquire if I wanted to invest in their deals.  Pretty brazen considering the dumpster fire we all got left with at RS.  Also technically theft of RS's intellectual property if he took his client list with him after he was let go.  This is the first direct instance I've seen of a sponsor behaving badly, but I'm sure there are others.  People in financial services get sued over stuff like this, especially if someone took a client list from a former employer with the intention of soliciting business for a new employer.  Uncertain if this is an individual acting alone or at Cooper Street's direction.  Either way, it's unethical behavior.

I haven't responded, but am considering a few options:

1. email him back and tell him to lose my contact info
2. email Cooper Street directly to let them know about it
3. email Realty Shares to let them know their at least some of their client's info was taken and is now being used by a 3rd party

Welcome thoughts from the group on appropriate next steps.

ramesh

Quote from: John_PVF on February 05, 2019, 06:01:50 PM
Was the email you got from Cooper Street unsolicited?  if so, how did they get your name and contact info as a deal level RS investor?



In my case his reaching out was not unsolicited. I had reached out to him and Amy in November for some visibility into the mess at RS, and he has been helpful.  When he told me he had gone over to Cooper, I asked him for color on the VDL deal, RS' approach to client communication having mutated to what it is today.

All of what you say may very well be correct, but I am worried about forms of sponsor misbehavior that affect my chances of seeing my principal again.  This  doesn't appear to be one of those, but I will keep an open mind.

John_PVF

Glad to hear yours at least wasn't unsolicited.  Seemed too big of a coincidence, but who knows.  Agree that there are more damaging forms of sponsor misbehavior, but remember that Realty Shares is trying to get a premium on their servicing rights by selling access to a big list of accredited investors, i.e. us.  if others are pilfering that list, that makes it less valuable to a buyer.   Like you, my primary objective here is to get as much of my principal back as quickly as I can get it back.  in the interim, RS needs to sell this thing to a competent servicer and start taking care of us a little better.

princyraj

Quote from: ramesh on February 05, 2019, 06:39:51 PM
Quote from: John_PVF on February 05, 2019, 06:01:50 PM
Was the email you got from Cooper Street unsolicited?  if so, how did they get your name and contact info as a deal level RS investor?



In my case his reaching out was not unsolicited. I had reached out to him and Amy in November for some visibility into the mess at RS, and he has been helpful.  When he told me he had gone over to Cooper, I asked him for color on the VDL deal, RS' approach to client communication having mutated to what it is today.

All of what you say may very well be correct, but I am worried about forms of sponsor misbehavior that affect my chances of seeing my principal again.  This  doesn't appear to be one of those, but I will keep an open mind.

+1


GA Investor

I finally received a response from RS on my missing January distributions. Clearly a standard form response and no answers whatsoever for my very direct questions on distributions where I know sponsors submitted payments. It would have been nice to get a notice on the website to this effect a month ago but keeps up RS's tradition of poor investor communication.

"Thank you for your email. As the method that the borrowers pay us has changed, the payment may be slightly delayed. We will provide an update on the status of the distributions as soon as it becomes available from the sponsor. When notifications are posted in your dashboard, an email will also be sent to alert you. We appreciate your patience."

Paul20

Quote from: Plimsoll on February 03, 2019, 06:42:06 AM


Paul20,  I am invested in Sutton Square and Kingswood Court.  Both have the same sponsor, Kingswood Court is up to date on distributions, so I think there is hope for Sutton Square to get back on track.

That is good to hear.  To be honest, the sponsors for Sutton Square do provide quite detailed quarterly updates, so I do have hope for that one.

I think both of the sponsors for my deals were caught off guard by the low-quality tenant bases with major percentages of non-paying tenants(multiple time consuming and costly evictions). Add this with capital reserve balances that weren't big enough to renovate so many units at once.

Like most of you, I'm just happy to get my principal back. Think of the opportunity cost of the these investments! Some of us would be making more in a money market fund!

-

mspringer

FWIW, I have 3 current deals with RealtyShares: Church's Chicken in Apopka, Apartment in Dallas, and new construction in on Linda Terrace, CA.  Based on what updates I am able to get, I'm only comfortable with the Church's at this point.  If anyone has additional information on any of these investments, I'd love to hear it.

This week I called Assure and left a message and later that day received a return call from Travis at Assure.  As you can imagine, he has heard from a number of not so happy RS clients and is hearing a consistent theme (lack of communication, etc.).  He was very pleasant to speak with and pretty up to date on where things stood on the transition.

It sounds like Assure is being brought in to handle the administration portion of the deals, which will include payment processing and tax forms.  It is NOT the plan for Assure to work as a customer relations agent.  That should still go through the contact@realtyshares.com email address.  However, Travis did say that his group was going to be working with the email support to try and triage and improve the communication response time on return messages.  It sounds like it is a skeleton crew left at RS (my words not his) and I'm assuming even that crew will be jumping ship as new job opportunities arise.

In the meantime, 1099s are going through the mail currently/soon.  While he said K-1s should be mid-March.  I would be shocked if those aren't delayed as well.  My one K-1 last year was late even with RS in full swing. 

I appreciate this thread and while I hate that we are in this situation, it is nice to at least have some form of communication after the radio silence I've been getting from RS.

princyraj

Quote from: John on February 06, 2019, 12:27:56 PM
Just received this update from RS regarding the preferred equity investment in Utah Diversified Residential Fund II, Salt Lake City, UT:

February 6, 2019
RealtyShares has engaged counsel and is setting up a call with the sponsor to discuss the repayment of the equity investment. RealtyShares will update you in the next 30 days when we have agreed upon a structure.

Not sure why they have engaged counsel unless the sponsor--BlueMountain, Inc--has just given up on it and is trying to avoid 100% repayment. (The maturity is still months away, although the December distribution has not been made.) The sponsor didn't provide a Q2 report and the Q3 report had a balance sheet that looked like it was prepared by someone that doesn't know how to use Excel.

This was BlueMountain's 6th deal with RS, so if anyone else has any experience in past or current deals with them, please post about your experience.

I am invested in the same property too and would have appreciated little more detail from RS. I am goign to try the usual email channel to see if I get any more details.

Sam

John - I just thought of something. You can write out your grievances here in the forum and send him a link to show we're all observing their actions.
Regards,

Sam

samalamadingdong

#258
I heard back from RS that one of their senior people went to actually visit the property in Los Gatos and meet with the borrower. Evidently, the construction and inspection process has been slow. But they seem to think they'll be back on track for construction in three months and they noted they should not need an extension of the loan. Ok. But they didn't address the issue of when regular payments would start in again. So it was kind of an odd reply in that it didn't answer the central question: when will scheduled payments be seen again and is there any anticipated problem with getting back principle. Saying they won't need an extension seems to imply that it's ok. But still vague.

This investment is 143-151 E Main Street Tranche 2, Los Gatos, CA. Sponsor Sridhar Equities. Exit date is 12/2019

princyraj

Quote from: Sam on February 07, 2019, 08:37:15 AM
John - I just thought of something. You can write out your grievances here in the forum and send him a link to show we're all observing their actions.

That's a great idea!!! I will mention it in my communication and I hope a few others do the same too.