Thoughts On RealtyShares Closing Its Doors To New Investors

[stingray]

@andyo:  My experience is that if you write to contact@realtyshares.com, you will receive a reply in 1-3 days, often from Eric Sullivan.

[JD]

An interesting happening for me today regarding all of this.

I received a notification that a Tier 3 investment of mine had been repaid, which was great news, especially given the tier level. It was for a property called Cleveland Office Heights.

The name sounded to me like it could have been the offering that was the worst of all of my RS deals, which I have posted on here before about but I wasn't certain it was the one I was thinking of. So I tabbed through my Dashboard -> Investments to verify. My recollection was that the one I was worried about was called Communications Drive but it was also an office building in the Cleveland area.

I couldn't find Communications Drive in my list of Investments so I skimmed e-mails just to see if perhaps I had the name wrong and this Cleveland Office Heights was that terrible investment. However, I discovered they were certainly 2 distinct offerings and that they were both rated Tier 3.

So I went back to my Dashboard -> Investments and tabbed over to "Exited". At the top of that list was Communications Drive - and it noted that I had received all of $142 in interest and that $0 principal had been returned.

When I went through the updates for it, the last one was one I had received on June 26 that I posted about here and then e-mailed Eric Sullivan with some comments and thoughts from everyone on the board here that had chimed in. He never replied to my e-mail. However, the update stated that IIRRM would continue looking into the best course of action against the borrower and update in 90 days or so. It said nothing about the investment being closed or written off.

I have reached out to Eric again and will post back with his reply (assuming he does reply). But I thought this should be a caution to everyone that you might want to check your Exited investments just to see if something that you weren't aware of has been marked as Exited, either intentionally or inadvertently.

[JD]

An interesting happening for me today regarding all of this.

I received a notification that a Tier 3 investment of mine had been repaid, which was great news, especially given the tier level. It was for a property called Cleveland Office Heights.

The name sounded to me like it could have been the offering that was the worst of all of my RS deals, which I have posted on here before about but I wasn't certain it was the one I was thinking of. So I tabbed through my Dashboard -> Investments to verify. My recollection was that the one I was worried about was called Communications Drive but it was also an office building in the Cleveland area.

I couldn't find Communications Drive in my list of Investments so I skimmed e-mails just to see if perhaps I had the name wrong and this Cleveland Office Heights was that terrible investment. However, I discovered they were certainly 2 distinct offerings and that they were both rated Tier 3.

So I went back to my Dashboard -> Investments and tabbed over to "Exited". At the top of that list was Communications Drive - and it noted that I had received all of $142 in interest and that $0 principal had been returned.

When I went through the updates for it, the last one was one I had received on June 26 that I posted about here and then e-mailed Eric Sullivan with some comments and thoughts from everyone on the board here that had chimed in. He never replied to my e-mail. However, the update stated that IIRRM would continue looking into the best course of action against the borrower and update in 90 days or so. It said nothing about the investment being closed or written off.

I have reached out to Eric again and will post back with his reply (assuming he does reply). But I thought this should be a caution to everyone that you might want to check your Exited investments just to see if something that you weren't aware of has been marked as Exited, either intentionally or inadvertently.

Reply from Eric:
"This investment looks to be a loss as investors are in 2nd position and 1st position foreclosed.

The last update left a bit of a cliff hanger, I will reach out to asset management and request an update."

Followed by update:

"According to our findings, this asset (2nd lien loan) has been identified as a Tier 3 asset. All possible distributions, interest payments and proceeds from this investment have now been collected and paid in accordance with the investors' rights per the loan documents.

IRM has classified this investment (2nd line loan) as Failed on 08/06/19. The 1st lien lender foreclosed on August 6, 2019, thus becoming a REO property of the 1st lien lender. The valuation estimate for the vacant property was approximately $3 million. Because the 1st lien loan balance was approximately $6 million and once foreclosed on near the $3,000,000 value, this causing Realtyshares investors to take a total loss on its investment of $1 million (principal). 

IRM consulted with their attorneys and after evaluating the merits, the potential legal expense (cost), and the unlikelihood of collecting any proceeds by joining in with the 1st lien lender in filing a guaranty lawsuit against the borrower, IRM decided, at the present time, not to pursue further legal action against the borrower on collecting on the $1,000,000 deficiency.

IRM will now close this investment, no further updates, payments or distributions will be made for this investment."

[stingray]

Fellow investors, would you mind sharing some simple stats from your portfolios?
I would like to measure how bad this RS debacle really is.  Here are my statistics:

Total deals:  15

Repaid in full:  9
Exit with partial loss of principal:  1
Ongoing and current: 2
Ongoing, defaulted, look like total loss:  3
    Of those:  1 failed business, 2 look like outright theft

[cfojim]

Per Stingray request -

Portfolio Summary:

Total deals: 38
Repaid in full:  29
Exit with partial loss of principal:  0
Ongoing and current: 4 (some may deteriorate, too early to tell)
Ongoing, defaulted, look like partial loss, some over 50%:  4 (2 Franchise Growth loans, Stellar Homes Fund I preferred equity, 151 Bernard Street loan)- all 4 look like inexperienced sponsors)
Ongoing, defaulted, look like total loss:   1 (SFR Package loan, which looks like fraud/theft)
   

[crossfire]

Total deals: 17

Repaid in full:  12
Exit with partial loss of principal:  0

Ongoing and current: 1 (Eastland Village - Common Eq)
Ongoing, defaulted, look like partial loss: 4
                                                     16620 Linda (2nd Lien - fraud/theft)
                                                     405 Alberto (2nd Lien - fraud/theft)
                                                     Louisville MSA - FG Deal (Senior De - fraud/theft)
                                                     1 Sand & Sea (Pref Eq - inexperienced sponsors???)

[DigitalNomad]

Total deals:  20

Repaid in full:  15

Ongoing and current: 3
Hampton Inn Memphis Collierville
Springbrook Apartments Development
Centre Pointe Plaza

Ongoing, defaulted, look like total loss:  1  (New England High Yield Portfolio VII)
Ongoing but unknown status, probably some loss: 1 (210 Aerie Court)

[JD]

Total deals:  27

Repaid in full:  6
Exit with partial loss of principal:  0
Exit with full loss of principal: 1 (unquestionably fraud/theft)
Ongoing and current: 15
Ongoing, defaulted:  6
    Of those:  2 FG (opinions vary), 2 Chicago Retail (likely fraud), 2 underperforming businesses

[ramesh]

Total deals: 13 (4 debt, 1 pref equity, 6 equity)
Repaid in full/almost entirely: 4
Defaulted & partially repaid: 1 (FG)
Ongoing: 8
  - troubled 1/8 (pref equity NJ Multifamily Fund)
 

[barnold24]

Total deals: 10
Repaid in full: 8
Ongoing and current: 1 (Anderson Ferry Plaza)
Ongoing and troubled: 1 (NJ Retail)

[macon-d]

Total Deals: 26
Repaid in Full: 11
Defaulted: 1
Ongoing and Current: 9
Ongoing and Troubled: 3 (220 Unit MultiFamily Springfield Il, 280 Unit MultiFamily Texas, Capital District Multifamily)
Ongoing and Likely Total Loss: 2    (New England Home Fund II,  New England Home Fund V)

[Dgilpin]

Total deals: 4

Exited: 0

Ongoing & current (tier 1): 1  (penbrook club apartments) common equity

Ongoing troubled (tier 2): 1 ( Lincoln heights apartments) preferred equity

Defaulted (tier 3): 2  (both franchise growth:  Long Island American family care and Detroit dog Haus- taco johns.  Both supposedly expecting 100% reimbursement according to IIRM.

[groovydude]

Total deals:  9

Repaid in full:  3
Exit with partial loss of principal:  1
Ongoing and current: 5
Ongoing, defaulted, look like total loss: 0

3 of my ongoing are problematic (late payments), but seem to be on track still in the long run.

[babets]

My situation:

Total deals:  10

Repaid in full:  1
Exit with partial loss of principal:  0
Ongoing and current: 9
Ongoing, defaulted, look like total loss:  3
    Of those: 1 stopped payments and returned no principal so far, 2 returned approx 50% of ptincipal so far (all FG investments)

All in all my return on investment is positive, 6 out of 10 are performing as per the original business plan, 1 is underperforming and 3 are the FG deals. Fortunately in these 4 i just put 5k each...

[mspringer]

Total deals: 5

Repaid in full:  3
Exit with partial loss of principal:  0

Ongoing and current: 0
Ongoing, defaulted, look like partial loss: 2
                                                     16620 Linda (2nd Lien - fraud/theft)
                                                     Franchise Growth: Church's Chicken (Apopka, FL)

[dwengca]

"Earning" page failed to load for me on the RS website?  Is it just me?

[stingray]

@dwengca--The Earnings page is working for me.

[dwengca]

@dwengca--The Earnings page is working for me.

Thanks!  It works for me now.

[berkel]

First, I was very happy to see the update on the Cleveland Office Highland Heights deal, but I will feel better when the principal hits my account.

Here are my metrics:

Total deals:  6

Repaid in full:  3 (4 once Cleveland Office Highland Heights hits)
Exit with partial loss of principal:  0
Ongoing and current: 2
- Castle Court Apartments Seattle has an extension and hopefully they will continue to pay
- American Family Care paid back ~50% of the principal, not sure on the likelihood of getting the rest.  Not exited yet, but worst case I lose the remaining principal.
Ongoing, defaulted, look like total loss:  0

Overall, if Castle Court closes ok, I will have a net gain, even with the principal loss on American Family Care, but hoping for the best

[JD]

First, I was very happy to see the update on the Cleveland Office Highland Heights deal, but I will feel better when the principal hits my account.

Here are my metrics:

Total deals:  6

Repaid in full:  3 (4 once Cleveland Office Highland Heights hits)
Exit with partial loss of principal:  0
Ongoing and current: 2
- Castle Court Apartments Seattle has an extension and hopefully they will continue to pay
- American Family Care paid back ~50% of the principal, not sure on the likelihood of getting the rest.  Not exited yet, but worst case I lose the remaining principal.
Ongoing, defaulted, look like total loss:  0

Overall, if Castle Court closes ok, I will have a net gain, even with the principal loss on American Family Care, but hoping for the best

I got the Cleveland principal back today, as you probably did. Sadly, it wasn't quite a full return of principal but only missing less than 1%.

I'm in Castle Court too. Fingers crossed.