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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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El jefe

Quote from: Sam on February 05, 2020, 06:09:58 AM
For those in the DME Fund, some income/distribution should be coming in today (Feb 5) or by end of this week. It looks like I have a pending distribution equal to 20% of my entire DME fund investment.

I had reached out wondering why I hadn't received anything since late 3Q2019. IRM reminded me that they have up to 90 days after the the quarter closes to pay.

Still waiting for the quarterly DME fund review to post though. That's where I'm really interested in knowing the details of each deal.
Happy to get the cash, but interesting we still haven't received any communication/investor report one week later..

barnold24

Quote from: JD on February 07, 2020, 12:57:04 AM
Quote from: schin98@juno.com on February 06, 2020, 08:03:18 PM
"But you know one thing they are really good at - taking management fees. It's quite a slap in the face when an investment is *finally* going to pay out a distribution and IRM deposits $100 in your account, taking the bulk of it for "past due management fees". They would have been wise to waive some of those fees for a good part of last year, in order to make up for all of the problems."

It sounds like you are surprised. It's probably time for a wake-up call if any of you are still surprised. IRM is in this to make money. They will take every dime they can out of this POS and will squeeze the marrow out of the bones if they can. Realtyshares didn't get taken over by the American Red Cross, they got taken over by an investment consortium. Their only job is to make money for their shareholders. The only way we'll get any of it is to sue. Stop dreaming that they are in this to help you.

Only surprised that they think we'll actually invest with Iintoo and/or will not pursue legal action after managing in this fashion. If they were a smart investment consortium, they would have realized how much more they could have made off of this group of investors with better management tactics.

Their communication stinks - I am down to 2 deals neither paying - one is a strip center and they sent out the 3rd Qtr financials and all of the revenue numbers were negative. Asked question and no response back.

cgblack

For those of you invested in 1 Sand and Sea, I asked the following:

===================================
So the last notification stated, "The asset manager will be visiting the site to make an assessment of the progress in the next 4 to 6 weeks."  4 to 6 weeks has come and gone and no update.  Can you guys stick to your stated deliverables?  It would increase our confidence that the sponsor might meet their deliverables if the people watching over them did in the first place.

Can we can an update on this investment please?  Based on the lack of rain, there should have been significant progress towards completion by now.
===================================

The response was not very inspiring:

Thank you for your email. I reached out to the Asset Manager for your investment, he stated he was unable to meet at the site with the managing member because he is Los Angeles and has not been available. This has delayed the site visit. He will be on site in the next 2 weeks and will be meeting with our Asset Manager.

We appreciate your patience.
===================================

The planned on meeting over 6 weeks ago and can't coordinate a time for a site visit??  Now they push it out another two weeks.  Frustrating to say the least.  I won't be surprised if two weeks from now there is no new update.  This investment has paid a penny since 10/16/2018 and was supposed to ext 10/06/2018. 




Hindsight2020

I'm in this one, too, and am frustrated with the repeated mistakes with the project and lackadaisical oversight.

If the August 2018 update was correct, the first lien is about $4.03 million, and at present, I estimate the stack through the preferred plus accrued value is about $6.5 million. In a February 2019 update we were told they were informed by brokers the house should sell for $8.5-$9.0 million. They cited "brokers", and it was still RealtyShares managers, so take it for what it is.

However, I found a recent sale of a neighboring home. https://www.redfin.com/CA/CARMEL-BY-THE/4-Sand-Sea-93921/home/169959879

It's about 1,600 sf and sold for $5.5 million ($3,438/sf). It could use some updating, and I can't tell if the views of the ocean are as good.

1 Sand and Sea was originally 2,072 sf, but changes along the way, according to the updates, have added another ~100 sf to the size of the house. If we use this sf and the $3,438 figure from the comp, it suggests a value of about $7.5 million, excluding any premium for its remodeled status. This leaves me hopeful. My confidence would definitely be bolstered by better communication from asset management.

cgblack

Quote from: Hindsight2020 on February 24, 2020, 11:21:51 AM
I'm in this one, too, and am frustrated with the repeated mistakes with the project and lackadaisical oversight.

If the August 2018 update was correct, the first lien is about $4.03 million, and at present, I estimate the stack through the preferred plus accrued value is about $6.5 million. In a February 2019 update we were told they were informed by brokers the house should sell for $8.5-$9.0 million. They cited "brokers", and it was still RealtyShares managers, so take it for what it is.

However, I found a recent sale of a neighboring home. https://www.redfin.com/CA/CARMEL-BY-THE/4-Sand-Sea-93921/home/169959879

It's about 1,600 sf and sold for $5.5 million ($3,438/sf). It could use some updating, and I can't tell if the views of the ocean are as good.

1 Sand and Sea was originally 2,072 sf, but changes along the way, according to the updates, have added another ~100 sf to the size of the house. If we use this sf and the $3,438 figure from the comp, it suggests a value of about $7.5 million, excluding any premium for its remodeled status. This leaves me hopeful. My confidence would definitely be bolstered by better communication from asset management.

My worry is they are going to take so damn long to complete it we'll end up in downturn in the luxury housing market, if we haven't already.  I'm still cautiously optimistic but would really like this to get to market and be over with.

ReadyToSue89

#1245
Redacted

dwengca

How are you guys doing with your existing investments?

I'm not doing too good with mine, majority of my active investments are not and haven't been paying anything.   

220 Unit Multifamily in Springfield, IL, Springfield, Illinois, This one has been behind in payment for several years, not looking good here
Club Creek Apartments, Austin Tx.   Haven't been paying since Sept 26 2019.    Not sure what's going on currently
Mooresville Festival in Charlotte Metro, Mooresville, NC, paid recently.. might be doing okay
1 Sand and Sea, Carmel, CA,   This one has not paid a dime for like 3 years already, no end in sight. 
Ortega Village Townhomes, Jacksonville, FL,  last paid 3/2019, not sure what is going on currently
Philadelphia Multifamily Fund VII, Philadelphia, PA,  this one will probably be a huge loss, poorly managed/possibly even fraud
Corey Place, Grand Prairie, TX - last payment in July/2019, not sure what's going on currently
Sutton Square Townhomes, Columbus, OH, last payment in 2018.   This one is not doing well, probably will be a big loss here
Hampton Inn Memphis Collierville, Collierville, TN, last payment 8/2019.  Not sure what's going on with this one
New Jersey Multifamily Fund II - this one probably will be a huge loss, poorly managed/possibly even fraud

In summary, out of my 10 remaining investments,

Only 1 is still paying
2 for sure will suffer from major loss based on the latest communication
2 most likely will suffer major loss
5 are behind and unsure of the current status

What a sad state it is for me...



JD

Quote from: dwengca on March 02, 2020, 04:01:01 PM
How are you guys doing with your existing investments?

I'm not doing too good with mine, majority of my active investments are not and haven't been paying anything.   

220 Unit Multifamily in Springfield, IL, Springfield, Illinois, This one has been behind in payment for several years, not looking good here
Club Creek Apartments, Austin Tx.   Haven't been paying since Sept 26 2019.    Not sure what's going on currently
Mooresville Festival in Charlotte Metro, Mooresville, NC, paid recently.. might be doing okay
1 Sand and Sea, Carmel, CA,   This one has not paid a dime for like 3 years already, no end in sight. 
Ortega Village Townhomes, Jacksonville, FL,  last paid 3/2019, not sure what is going on currently
Philadelphia Multifamily Fund VII, Philadelphia, PA,  this one will probably be a huge loss, poorly managed/possibly even fraud
Corey Place, Grand Prairie, TX - last payment in July/2019, not sure what's going on currently
Sutton Square Townhomes, Columbus, OH, last payment in 2018.   This one is not doing well, probably will be a big loss here
Hampton Inn Memphis Collierville, Collierville, TN, last payment 8/2019.  Not sure what's going on with this one
New Jersey Multifamily Fund II - this one probably will be a huge loss, poorly managed/possibly even fraud

In summary, out of my 10 remaining investments,

Only 1 is still paying
2 for sure will suffer from major loss based on the latest communication
2 most likely will suffer major loss
5 are behind and unsure of the current status

What a sad state it is for me...

That is a real bummer my man - sorry to hear it.

I'm in better shape but still not great. The only one of your deals I'm in is Corey Place and yeah, while they did send an update as to what's happened, it's concerning that they "do not intend to make any future distributions to IRM". Worst of all, that was my largest investment on the platform by a longshot.

I do have to say that February was the best total distributions I've received since mid-last year. So some things have improved and I did have 2 deals that paid off so that was positive as well. I don't think all is lost but I certainly have a handful of deals in the red.

I still have 16 active investments so I won't list them individually:
- 8 have paid some distribution since November 2019 so I consider those "current and as expected".
- 2 are FG deals. Nuff said.
- 3 paid out at some point in 2019 but have not since then. They are generally classified as "Tier 1 or Tier 2" where the sponsor is communicative but the deals aren't performing as expected.
- 1 was recently upgraded to Tier 2 from Tier 3 as the sponsor had disappeared but apparently now they are back in touch. Still has never paid a cent.
- 1 is Corey Place.
- 1 is supposedly being paid off soon but seems to be taking longer than expected. It's part of a group of Seattle-based investments that seem like they should be okay as the sponsor has a lot of properties under their umbrella and most are in fine shape.

It's not a great bucket is it. At least there are some lawsuits shaping up that may help us all out.


ramesh

I am in two of these deals, and I can share what little I know about them.

Quote from: dwengca on March 02, 2020, 04:01:01 PM
How are you guys doing with your existing investments?

I'm not doing too good with mine, majority of my active investments are not and haven't been paying anything.   

Hampton Inn Memphis Collierville, Collierville, TN, last payment 8/2019.  Not sure what's going on with this one
New Jersey Multifamily Fund II - this one probably will be a huge loss, poorly managed/possibly even fraud


Hampton Inn has had two setbacks: their largest business customer (Fedex) imposed a travel freeze in the middle of 2019, and this has hurt revenues. They have also experienced significant delays with the permitting process which has impacted the PIP schedule.  I am disappointed that this equity investment has not made distributions, but this looks to me like normal operational risk. They have been downgraded to a Tier 2.

The sponsor of the NJ Multifamily Fund -- O'Neill --, OTOH  looks likes a basket case. I have penciled in a 50% expected loss in  this preferred equity investment, but that might turn out to be an underestimate.  This is a poster child for the incompetence of the clowns that founded and ran RealtyShares.

groovydude

I feel for everyone with underperforming or non-performing investments, However, IRM notifications are AWEFUL!!! Whomever is in charge of this needs to go back to college and take a few English classes.  I got a notification today about one of mine - Transit Oriented Development. The short of it is I have no idea what's going on with this investment, I can't make one bit of sense from this post (combined with the fact that the investment is now cataloged as "exited" even though I have not seen a final distribution). I'm not too worried, as this is one of my better RS deals, but IRM has no ability to communicate basic concepts. It's making what is probably a good deal look bad. This is the second time I've seen this pattern. So, for all of you out there with deals that look horrible, maybe there's a little hope. I'll update when/if I get something tangible from IRM. Sheesh. And if you invest with iintoo, good luck!

groovydude

Quote from: groovydude on March 04, 2020, 04:45:33 PM
I feel for everyone with underperforming or non-performing investments, However, IRM notifications are AWEFUL!!! Whomever is in charge of this needs to go back to college and take a few English classes.  I got a notification today about one of mine - Transit Oriented Development. The short of it is I have no idea what's going on with this investment, I can't make one bit of sense from this post (combined with the fact that the investment is now cataloged as "exited" even though I have not seen a final distribution). I'm not too worried, as this is one of my better RS deals, but IRM has no ability to communicate basic concepts. It's making what is probably a good deal look bad. This is the second time I've seen this pattern. So, for all of you out there with deals that look horrible, maybe there's a little hope. I'll update when/if I get something tangible from IRM. Sheesh. And if you invest with iintoo, good luck!

I emailed and received clarification today: the sponsor has notified IRM that it will be paying off the investment at the end of the month (and the investment was listed as exited prematurely). Why was it so difficult to say this?  The good news is that this is a few months ahead of schedule.

barnold24

So just got 2 K-1 notifications paraphrasing we are going to try really hard but plan on not getting your K-1's anytime soon.

1UnknownSubject

Yes - I received the same message. Second time in a row that I likely will has to file an extension all from the poor management on their end. I cannot wait to get out of these investments. If I get out whole I will thank my lucky stars.

mspringer

Quote from: 1UnknownSubject on March 08, 2020, 07:14:19 PM
Yes - I received the same message. Second time in a row that I likely will has to file an extension all from the poor management on their end. I cannot wait to get out of these investments. If I get out whole I will thank my lucky stars.

I am nowhere near whole, but this should be the last year I have to wait on a K1.  My remaining investment (Franchise Growth) is a 1099 and usually ahead of tax filing deadline.

ramesh

IRM sent out a note this morning  to investors in two Woodcreek Farms equity deals.  In effect, the sponsor has had a rough go of this property in the first year after purchase, but has been righting the ship steadily since.  They have made a purchase offer for the two RS equity tranches at a small discount. IRM has declined the offer.  I think this is a sound gambit on IRM's part given the improvement in the operational status.  Happy to hear more informed views -- more informed than mine -- on the issue .

Here is the relevant excerpt:

IRM recently received an unsolicited purchase offer from the sponsor, Ginko Residential, to purchase Realtyshares 346  LLC, % equity ownership Interest in Ginkgo Arbor Ceek LLC that owns the Arbor Creek Apartments, for $1,250,000 ($1,560,000 minus the $310,000 for the missed capital call) and to purchase Realtyshares 357 LLC, % equity ownership Interest in Ginkgo Woodcreek LLC that owns the Woodcreek Farms Apartments, for $975,000.

The sponsor sent IRM two recent copies of Broker's Opinion of Fair Market Values (BOV) on both Woodcreek Farms Apartments and Arbor Creek Apartments.

The sponsor's purchase offer to purchase Realtyshares 346  LLC, % equity ownership Interest in Ginkgo Arbor Ceek LLC for $1,250,000 and to purchase Realtyshares 357 LLC, % equity ownership Interest in Ginkgo Woodcreek LLC for $975,0000 was below Realtyshares 346 LLC original equity investment in Ginkgo Arbor Ceek LLC of $1,385,000 on 01/24/18 and was below Realtyshares 357 LLC original equity investment in Ginkgo Woodcreek LLC of $1,000,000 on 12/21/17. 

After IRM reviewed and analyzed both purchases offers from the sponsor, IRM declined both purchase offers, because this would have resulted in Realtyshares 346 LLC investors and Realtyshares 357 LLC Investors, to take a loss on their original equity investments in both properties based on the current fair market values on Arbor Creek Apartments and Woodcreek Farms Apartments.

John_PVF

Got the same thing.  I'm actually surprised we haven't seen more of this from sponsors, at least ones that have a good handle on the underlying investment and think they have some incremental value there.  The sponsor is probably assuming that most RS deal-level investors would be happy to just get the bulk of their money back and walk away, then they get to capture all the upside vs. sharing it.  It's what I would do if I was in their shoes and had the funds.

Have to give IRM some credit here too that they didn't just take the offer as is.  They must think there's some incremental value there and will hopefully be able to get it for us.  I would welcome a sponsor buy-out happening on this and all my remaining RS investments, let's just hope the bid-ask isn't too big and a deal can get done. 

RealWealthManagement

Hey guys. I know both the mortgage and brick and mortar REITs have really been hit hard by the Corona Virus. How has the stability been in the Crowdfunding front? O is one of the shares that have been really hit hard. Thanks for any feedback as this is space I have been looking into to invest.

stingray

#1257
@RealWealthManagement:  My advice would be not to place any money into crowdfunding now.  This forum is, of course, a case study in the perils of crowdfunding.  Crowdfunding platforms tend to attract low-quality or fraudulent borrowers; all the high-quality deals are being cherry-picked by large, sophisticated investors who work through private networks. Particularly today, with the COVID-19 crisis, foreclosure proceedings are suspended, debtors are unaccountable, courts are effectively closed, and contracts are, as a practical matter, temporarily unenforceable.  Real estate, particularly commercial real estate, is likely to enter a severe downturn.  There is a massive amount of counterparty risk, not only at the borrower level but also at the platform level (RealtyShares is the textbook case).  Crowdfunding yields do not adequately compensate you for these risks.  I wish you the best of luck.

dwengca

Has anyone gotten any payments in the past couple of months?  I have not....

JD

Quote from: dwengca on March 31, 2020, 10:31:58 PM
Has anyone gotten any payments in the past couple of months?  I have not....

After a near record-setting February, I received 1 payment in March for a whopping $87.

I think it's pretty obvious why sponsors aren't paying now but considering I have 7-8 debt deals that were supposed to pay every month, having only 1 make their payment says it's probably a double-shot of covid+RS fail.