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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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dwengca

It's good to see that many of you are receiving payments.   It saddens me that I'm have not receive a single payment in Dec out of my 17 (180k) investment in Dec.   I still don't think they are doing a very good job in terms of managing our assets.    Really frustrating...

dwengca

Quote from: Beat_The_Fraud on December 19, 2018, 01:43:17 PM
Hi dwengca, Is most/all of your investments with the same sponsor?

No.  All of them are with different sponsors.   

RandyP

Quote from: JMartin on December 10, 2018, 02:32:30 PM
I have over US$ 700k in over 52 deals parked with Realty Shares, investing since 2014 - actually made US$ 144k in distributions over the last 4 years - which is meaningless considering the value now at risk.
95% of my deals are debt, more than US$ 200k already late and growing.
Improved frequency of updates and even distributions are not necessarily strong signs of improved management of the portfolio.
Direct queries about problems deals still remain largely unanswered, and most deals are being extended 3,6 months as they mature.

I am very surprised at how quiet it is here considering that you all also have significant amounts at risk. Any lawyers here? I would really like to organize massive collective investor pressure on sponsors/Realty Shares and VCs, perhaps legal action...
I'm a class action lawyer that has represented investors in securities class actions. I'm interested in Realty Shares, though honestly I don't know enough to say that there is liability or that litigation makes sense. I'm happy to review any documents to determine if there are next steps that can be taken to help investors.

Sam

Randy, I will find out more after my lunch this Friday afternoon with some key players and I'll let you know what's up.
Regards,

Sam

JMartin

Sam, is your lunch with RS current/previous staff or management?

JMartin

Quote from: RandyP on December 26, 2018, 09:30:08 AM
Quote from: JMartin on December 10, 2018, 02:32:30 PM
I have over US$ 700k in over 52 deals parked with Realty Shares, investing since 2014 - actually made US$ 144k in distributions over the last 4 years - which is meaningless considering the value now at risk.
95% of my deals are debt, more than US$ 200k already late and growing.
Improved frequency of updates and even distributions are not necessarily strong signs of improved management of the portfolio.
Direct queries about problems deals still remain largely unanswered, and most deals are being extended 3,6 months as they mature.

I am very surprised at how quiet it is here considering that you all also have significant amounts at risk. Any lawyers here? I would really like to organize massive collective investor pressure on sponsors/Realty Shares and VCs, perhaps legal action...
I'm a class action lawyer that has represented investors in securities class actions. I'm interested in Realty Shares, though honestly I don't know enough to say that there is liability or that litigation makes sense. I'm happy to review any documents to determine if there are next steps that can be taken to help investors.
=====================================================================
Hi Randy, I can send "investor packages" an "operating agreements" for you to review.  I have 50 open investments with Realty Shares, many chronically late..

RandyP

Quote from: JMartin on December 26, 2018, 02:20:08 PM
Quote from: RandyP on December 26, 2018, 09:30:08 AM
Quote from: JMartin on December 10, 2018, 02:32:30 PM
I have over US$ 700k in over 52 deals parked with Realty Shares, investing since 2014 - actually made US$ 144k in distributions over the last 4 years - which is meaningless considering the value now at risk.
95% of my deals are debt, more than US$ 200k already late and growing.
Improved frequency of updates and even distributions are not necessarily strong signs of improved management of the portfolio.
Direct queries about problems deals still remain largely unanswered, and most deals are being extended 3,6 months as they mature.

I am very surprised at how quiet it is here considering that you all also have significant amounts at risk. Any lawyers here? I would really like to organize massive collective investor pressure on sponsors/Realty Shares and VCs, perhaps legal action...
I'm a class action lawyer that has represented investors in securities class actions. I'm interested in Realty Shares, though honestly I don't know enough to say that there is liability or that litigation makes sense. I'm happy to review any documents to determine if there are next steps that can be taken to help investors.
=====================================================================
Hi Randy, I can send "investor packages" an "operating agreements" for you to review.  I have 50 open investments with Realty Shares, many chronically late..
I sent you a DM. Thank you.

cj60031

Realtyshares do not respond any email or phone call.  No one knows what is going on with them.  That is the big problem and I do not know what we can do to have any information on our investments.

Sam

I had a lunch meeting with a competitor/potential acquirer and it looks like they are not in the running. So RS still seems to be working on an M&A deal with someone else. The potential acquirer hasn't heard back from them, probably because their bid was too low. My close connection there also left in early Dec.

The potential acquirer didn't want to acquire the residential real estate book, only the commercial real estate book. Makes sense, since the residential real estate book (single family homes) are likely lower performing. Although there is a price for everything. RS wants to sell their entire book of business, hence the impasse.

Let's hope our December payments go through as normal. If nothing happens by January 15, it'll be time to follow up with the Co-CEOs, Alexis de Belloy and Ed Forst. January 6 will be two months since they shut their doors.
Regards,

Sam

Greg

Hi sparkkim,

For 405 Alberto way project we should call the the sponsor to see whats the problem they are not refinancing our loan with construction loan. I don't have any news about that project. For other project if they stop paying us in January we have to report to SEC or file a lawsuit.

cj60031

To Greg and Sparkkim

I do not think the sponsors would answer our calls even if they are in good positions since they made the deals with realtyshares.  We have to get all the investors to put heat on realtyshares by SEC reporting or lawsuit if they could not make a deal to have someone else to manage our investments properly soon.

dwengca

I agree.  I think we need to put pressure on existing and possible previous RS leadership folks and hold them accountable.    I feel that many of the investments were not properly vetted by them nor were they properly managed.    Even so call the "team" they put together to manage all the existing investments are not doing their job.  I can hardly to get them to respond to my emails.

Btw, I have received zero $$$ this month from my 17 active investments. 

Sam

Seeing, don't think December payments are made until January.
Regards,

Sam

stingray

Hi all, I am an RS investor with a lot of money on the line here, like many of you.  I have spoken with the new CEO Alexis and done a lot of research.  To those of your who feel frustrated, I would like to make a few points.

1.  The new CEO is not responsible for the present circumstances.  He strikes me as very capable, and I believe he cares about investors.

2.  RS has a skeleton crew now.  They cannot answer everybody's inquiries.  I suspect as the inquiries slow down, RS staff will become more accessible.

3.  If we make it too difficult for them and they all quit, we will have nobody to recover our funds for us.  We want them to succeed.  Be nice to them and try not to bother them unless you really need to.  I say this as somebody who is usually very aggressive in my business dealings.  But we need to be pragmatic and not work against our own interests.

4.  To those of you who have talked about legal action, I would like to offer a dose of realism.  First, read the agreements you signed.  They include an arbitration agreement and class action waiver.  Second, most of your investments were in special-purpose entities.  Those entities simply don't have money to pay you.  The people who have money to pay you (hopefully) are sponsors/borrowers.  We want to make sure that RS stays on top of them--please see comment #3.

5.  The State of California Department of Business Oversight is aware of the RS meltdown.  If you have a legitimate problem and are prepared to document it in detail, consider contacting them (see below).  I don't think they will advocate on your behalf, but it is important for the regulator to know the scope of problems that investors are experiencing.  The goal here is not to hound RS.  To the contrary, if RS completely disintegrates, the State may be able to step in and appoint a receiver.

Adam.Wright@dbo.ca.gov>

Adam Wright
Senior Counsel, Enforcement Division
California Department of Business Oversight
320 West 4th St., Suite 750
Los Angeles, CA 90013-2344




Ventan

Hi Sam,
  Am a new member to the forum..have gone through your writeups. Wonderful articles of information. I have a lot invested through RS . Did you get chance to meet the CEo of RS..do we have any new info. I am having fingers crossed and hope they will not disappoint all the investors.

Thanks
Ven

Sam

Adam - Well said, however, why is the "new" CEO, who has been there for a year not responsible for the transition? I would think that as the CEO and person in charge of burning $28M in funding since late 2017, he should absolutely be responsible in open communication, vendor payments, M&A dealings, and so forth. If he is not responsible, who is?
Regards,

Sam

holymackerel

I have 3 investments in RS currently (unfortunately), 1026 Corsica Drive, Centre Point Plaza, and American Family Care Largo Fl.  Received one distribution in December from American Family Care, but have not received my December distributions from 1026 Corsica Drive, or Centre Point Plaza.  1026 Corsica Drive is set to go on the market (its a SFR) in March, I emailed the sponsor posing as an interested buyer and that is the date they gave me.  Hopefully it sells for a decent amount close the the projected amount and I can get my principal back with a little bit on top.  If they do sell and decide not to pay off the investors according to the contract, what recourse do we have???  They are a large sponsor with numerous deals so I don't think they would do that, however, sometimes people try to get away with things when things like this happen.  Unfortunately my Centre Point Plaza deal was a 7 year deal, so I have another 5 years go to on that one............

ramesh

Happy New Year everyone.  Hopefully there will be light at the end of this tunnel soon.

I am relieved to find this forum -- I have 100K invested in 11 deals, and have been frantically trying to gain some insight into the situation.  I reached out to a couple connections at RS (now ex-RS) and was assured that RS is actively seeking to ensure that an established player (one name mentioned was Cushman & Wakefield) would pick up the assets.

In the event that RS doesn't find a suitable buyer, the key issue I am worried about is whether RS has the financial & legal muscle to deal with sponsor misbehavior.  I had been receiving distributions regularly till November, but in December two deals didn't make distributions (Camden SC Multifamily and NJ Multifamily Fund).  In their investment webinar six months ago, the sponsor of the University of Buffalo Student Housing  promised to file reports "at least quarterly";  But, they have filed no reports to date;  they made one distribution in August and none in November or December.  Does a weakened RealtyShares embolden this kind of behavior?  At least in deals where the RS entity is the sole creditor/investor (not the case withe UB deal)?

Like Sam, I too have taken comfort in the fact that RS still has servicing rights worth $16-20M, and I figure the VCs have a self-interest in protecting this asset, and, thus, not leaving us investors in the lurch.   Based on what I read here, as well as  my reading of several quarterly reports, it seems like their underwriting has been very weak and they will need a lot of firepower to deal with oncoming delinquencies and defaults.

dwengca

Quote from: Sam on December 31, 2018, 05:14:15 PM
Adam - Well said, however, why is the "new" CEO, who has been there for a year not responsible for the transition? I would think that as the CEO and person in charge of burning $28M in funding since late 2017, he should absolutely be responsible in open communication, vendor payments, M&A dealings, and so forth. If he is not responsible, who is?

Wow. I didn't know they burned through 28 mil in funding since late 2017.  That is totally outragous.  I agree with you, if the CEO and the management team aren't responsible, then I don't know who is....

Sam

Quote from: dwengca on January 02, 2019, 02:32:39 AM
Quote from: Sam on December 31, 2018, 05:14:15 PM
Adam - Well said, however, why is the "new" CEO, who has been there for a year not responsible for the transition? I would think that as the CEO and person in charge of burning $28M in funding since late 2017, he should absolutely be responsible in open communication, vendor payments, M&A dealings, and so forth. If he is not responsible, who is?

Wow. I didn't know they burned through 28 mil in funding since late 2017.  That is totally outragous.  I agree with you, if the CEO and the management team aren't responsible, then I don't know who is....

Yep: https://techcrunch.com/2017/09/14/realtyshares-raises-28-million-for-commercial-real-estate-investing/
Regards,

Sam