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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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Sam

I finally got my 3Q2018 DME fund distributions. But this was the distribution they took out the fees, so it was around 80% less than I expected, as they didn't take out the fees during the previous distributions.

Better than nothing I guess!
Regards,

Sam

ramesh

Quote from: John on January 18, 2019, 01:36:43 PM
(Can anyone tell me anything about Franchise Growth, LLC?--I talked to a franchisee of one of the restaurants they raised capital for on RS and he said he had no idea who they are

Ouch!

I have invested in a Church's Chicken NNN debt deal offered by Franchise Growth.  They didn't seem to have much of a track record, so my investment was small.   I know next to nothing about these guys.   FWIW, here is a puff piece I found on them:

https://menafn.com/qn_news_story_s.aspx?storyid=1095448965&title=Franchise-Growth-LLC---An-Integrated-Turnkey-Solution-For-The-Franchise-Industry

dwengca

Quote from: RoyallyScrewed on January 17, 2019, 08:16:11 PM
Hello - Anybody here that invested in either SFR Package II or SFR Package I?  If yes, please DM me. Both of them were $2.5M loans each. Sponsor started defaulting in 3-4 months and declared bankruptcy. Here is the update I got on my dashboard.

SFR Package II 1/16/2019
01/16/2019
The sale has closed. The portfolio of homes secured by this loan was coupled with additional homes that were part of the same court action. Allocation of the purchase price was determined by the buyer. Reconciliation of the sale price and expenses and a calculation of losses will take as much as an additional week. It is clear at this point that the investment returned less than $0.10 on the dollar. The reasons for the poor results are several.

The borrower's original plan was to do minor repairs and clean up and to re-market the properties to local investors interested in purchasing individual or smaller groups of these homes. Only a few homes were sold, however, under this plan. The balance of the properties was not well maintained and so deteriorated physically. The property values decreased accordingly. Additionally, tax liens accrued and some of the houses were foreclosed upon by the taxing authority. Due to the number of potential liens on the property, cleaning up the title so that the properties could be sold was a lengthy, costly and time-consuming process. As a result of the sale, the net proceeds are expected to be less than $100,000. The loan has a personal guarantee and we are continuing to assess a potential continuation of our suit against the borrower. As a reminder, RealtyShares already has a judgment in California against the borrower, but we will need to have it perfected in Florida. In order to potentially fund the further pursuit of this judgment against the borrower, RealtyShares will not be immediately distributing the remaining proceeds of the sale to investors but will be temporarily holding that money while assessing the benefits of using those funds to continue to pursue that additional claim.  RealtyShares will update you with a reconciliation of the sale proceeds and with our findings on the chances of collecting on the guarantee judgment after we complete an asset search. The net sales proceeds will be promptly distributed if we determine that further litigation is unlikely to be of material benefit.

I do not hold these 2 investments, however, I gotta ask how did RS management allowed this to happen?  If this ended up being 10 cents on the dollar, then there is gotta be some fraud activities or some serious mis-management.    Was the data presented on the securities/properties to be used as lien misrepresented during the funding process?   

dolemite

Quote from: dwengca on January 18, 2019, 02:38:30 PMWas the data presented on the securities/properties to be used as lien misrepresented during the funding process?

Severely misrepresented.

finmaster

#184
Thanks for the update John. Has French growth been making interest payment regularly though? I know they had dozens of debt deals and I've invested in their Captain D deal. They had a bunch of educational credentials but absolutely no experience in real estate and looks like some of their restaurants are not being built.. looks like another classic scenario of mess, overextended and overleveraged investors' hard earned money with nothing to back up

cj60031

There is the link which lists some of properties from Franchise Growth for sale.  It looks like one of their properties (AMERICAN FAMILY CARE
West Islip, NY) is in operation and I do not know the situation of other ones.  I have received all the distributions from their three deals so far and just wait to see what happen in next few months.


https://www.embreegroup.com/properties/

sdnerd

I have 3 active investments with Franchise Growth LLC. Most recent distributions are 1 x this month (scheduled to exit in February), 2 x middle of December (both scheduled to exit several months ago). That looks at least semi-promising.

Two of the locations appear to be fully built, operational, and serving customers. Actually listed on the fast food companies websites, etc. That looks fairly promising there.

One of the locations they changed developers, and per the last update in the dashboard said construction would be completed sometime in January 2019. Semi-concerning there, but we'll see.

All of the locations should have 20 year leases w/ major franchises. "Should" just be a matter of finding a buyer for the properties. If the properties are built well, have 20 year leases on them with major franchises, and are up and running serving customers... seems hopeful. Now what they thought they could sell for may not come to be; but I would "hope" there is little risk of 10 cent on the dollar type of outcomes.

We'll see.

finmaster

#187
Do you have anything on  Capitain D at 1709 Midland Trail, Shelbyville, Kentucky? I know it's supposed to exit next month.

ramesh

If anyone has info about any of the following debt deals please share:

Church's Chicken Westminster, CO

Wytheville Captain D's, Wytheville VA

Camden South Carolina Multifamily, Camden SC

130 Bryant Avenue Walla Walla, WA

I think it would be broadly useful to create a repository of what is known about various RS deals.  If a couple folks are interested in doing this, I'd be happy to help.

svytraveler

 No knowledge, other than no distributions for 2019 yet, but I am also interested/invested in 130 Bryant Ave, Walla Walla, Washington.

kt1984

I had invested in 4 deals - with Franchise Growth LLC. One of them paid off on time (Chicago Dog Haus)- and 3 of them are paying distributions but I am extremely concerned.  I am invested in Captain D in Shelbyville, American Family Care in West Islip NY and Dog Haus/Taco John in Taylor, MI.  American Family care has been operating for a few months now and has good reviews and Captain D is scheduled to open in a couple of months (fingers crossed). Both of them are on sale at https://www.embreegroup.com/properties/ , American Family care had a 1031 exchange buyer who backed out and the note mentioned they have 2 other interested buyers but nothing has happened yet. Also, as John pointed out- construction on the 3rd one which was supposed to be a Dog Haus/Taco John combination in Taylor, MI stopped sometime last year.  The sponsor is trying to work with a partner to recapitalize and pay off the loan-however the distributions are still coming. I am extremely concerned as all of my investments are with a single sponsor. I was hoping these are 20 year NNN commercial deals with a first lien debt which would make them extremely safe, however I am very disappointed. Please keep me updated as you know more on these deals.

Karan

Ventan

Anyone invested in the Chicago Retail Portfolio Lockport 2nd Lien Tranche 2
We got a notification from RS stating below,
We received a letter from the 1st Lender that the first loan is in default for the failure to pay taxes or other municipal charges. We are following up with the borrower to understand the situation.

Any insight on this will be very appreciated.

Thanks
Ven

dwengca

Another example of extremely poor vetting and management

Just received an update today on 3081 Carrigan Canyon Drive...

The loan was 2.2 mil, but now RS has accepted an offer of 1.45 mi after almost 18 months in default.   I guess I should be glad that we are at least getting something back.  It seems clear to me that this property was never worth the value that it claimed to be. 

cgblack

We finally got an update for 1 Sand and Sea:

Framing has started but there is some delay due to rain. The subcontractor now has three framers to work full-time on this project. Other work has been on finalizing the design and making selections for windows, doors, appliances, fixtures, cabinetry, lighting, etc so that we have materials on site when the subs need them.  The GCs and the new project manager have created a greater sense of urgency to complete the project. We will update you in 30 days with the progress.

However no mention of the past three month missed distributions.  At least something is happening.

jy2005

I received same notice today. Any one interested in forming a watchdog group and protect our investment?

Quote from: Ventan on January 23, 2019, 11:41:31 AM
Anyone invested in the Chicago Retail Portfolio Lockport 2nd Lien Tranche 2
We got a notification from RS stating below,
We received a letter from the 1st Lender that the first loan is in default for the failure to pay taxes or other municipal charges. We are following up with the borrower to understand the situation.

Any insight on this will be very appreciated.

Thanks
Ven

Ventan

Quote from: jy2005 on January 23, 2019, 03:57:21 PM
I received same notice today. Any one interested in forming a watchdog group and protect our investment?

Quote from: Ventan on January 23, 2019, 11:41:31 AM
Anyone invested in the Chicago Retail Portfolio Lockport 2nd Lien Tranche 2
We got a notification from RS stating below,
We received a letter from the 1st Lender that the first loan is in default for the failure to pay taxes or other municipal charges. We are following up with the borrower to understand the situation.

Any insight on this will be very appreciated.

Thanks
Ven

I am in..letme know what you have in mind. I messaged the borrower via LinkedIn, waiting on his response.


jy2005

I am interested. Let's do it.

Thank you.

Quote from: ramesh on January 18, 2019, 06:25:16 PM
If anyone has info about any of the following debt deals please share:

Church's Chicken Westminster, CO

Wytheville Captain D's, Wytheville VA

Camden South Carolina Multifamily, Camden SC

130 Bryant Avenue Walla Walla, WA

I think it would be broadly useful to create a repository of what is known about various RS deals.  If a couple folks are interested in doing this, I'd be happy to help.

jy2005

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?

Thanks.


Quote from: Sam on November 09, 2018, 11:57:18 AM
Just spoke to someone at RealtyShares: They are keeping their entire asset management and servicing team (operational team) for the $400M in assets. Hence, nothing really changes at the moment. The only thing that changes is that you can't invest in more deals.

And if you think about it, given there are no new deals coming in for them to manage, theoretically, the job of the asset management and servicing team gets easier over time since they will eventually have less and less deals to manage as the deals roll off, while their pay I'm assuming will stay the same.

I'm looking on the positive side of things, as this is my nature. Feel free to share the negatives. I wonder if I can even try and join that team to help. Hmm.

kt1984

Hi John

Which case are you referring to? Also- any update/news from Franchise Growth LLC?

Karan

ramesh

For those invested/interested in Franchise Growth's Church's Chicken Westminster, CO deal.

Thanks to the goalz link posted by John,  I discovered that they (goalz) are the franchisee in this case.  Goalz's website says that the restaurant is to open shortly. Encouraging.