Bringing the Benefits Of Middle-Market Private Commercial Real Estate to the Wealth Management Channel – Financial Advisor Magazine
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Russ Alan Prince Executive Director
October 3, 2022
Sheldon Chang is President of CrowdStreet Advisors, LLC, a registered investment advisor and a subsidiary of CrowdStreet, Inc.—an investment platform created in 2013 to transform private commercial real estate investing and make it more accessible, transparent, and efficient. Today, CrowdStreet Advisors is focused on creating investment products and services to support advisors and their efforts to find new, diversified investment opportunities outside the public markets like those provided by private commercial real estate and other alternative asset classes.
With more than 30 years of experience leading businesses in the alternative investment and distribution industry, Chang oversees the CrowdStreet Advisors’ team, focusing on enabling advisors to access CrowdStreet’s highly differentiated private commercial real estate opportunities on behalf of their clients.
Russ Alan Prince: Tell me about CrowdStreet Advisors. Whom do you serve and what are your fund and service offerings?
Sheldon Chang: CrowdStreet Advisors provides advisors and their clients with access to opportunities to invest in private commercial real estate—CRE—curated by our team of specialists. We select projects from CrowdStreet’s proprietary deal flow, sourced from a deep network of 300+ regional real estate sponsors, developers, and operators.
CrowdStreet and the CrowdStreet Marketplace were initially launched to connect individual investors with growth-oriented private CRE investments in a way that wasn’t possible prior to the passing of the JOBS Act in 2012. Historically these kinds of investments were mostly available to people “in the know” or more seasoned investors that specialized in this kind of real estate and had the network, expertise, and resources needed to conduct due diligence and invest. CrowdStreet changed that.
In the years that followed, as our marketplace grew in popularity and the platform became more successful, investors began asking us to expand our offerings beyond single real estate deals to include funds and managed accounts. They were looking for easier ways to allocate across multiple properties. Instead of investing one deal at a time, they wanted professionally-managed options. In recent years, an interesting thing happened, a number of investors began introducing their financial advisors to CrowdStreet, and we began learning about the kinds of products advisors are interested in and how we can work with them and their clients.
CrowdStreet Advisors focuses on helping advisors learn more about private commercial real estate while providing a range of investment options tailored to their objectives and the hands-on support they’ll need over the life of an investment.
Today, we provide a variety of funds and service offerings, including our flagship REIT fund, CrowdStreet REIT I, Inc. (C-REIT), as well as thematic private funds and custom solutions. C-REIT was created to be a low-cost entry point for accredited investors looking for a simple way to invest in multiple private CRE investments: 20+ underlying properties, $25K investment minimum, simple1099 tax reporting. For clients looking for targeted exposure to multiple properties based on a specific theme or investment strategy, we periodically launch thematic private funds. These typically are structured like traditional private funds with $150K investment minimums, and they invest in 8 to10 properties.
For example, this past year, we’ve launched a number of thematic funds, including Opportunity Zone, Multifamily, Life Sciences, and Opportunistic. Lastly, for advisors looking for something tailored to their specific needs, we have the ability to create custom solutions. We’re essentially a traditional investment management firm wrapped in a financial technology company. And in my opinion, this may be one of my favorite things about being a part of CrowdStreet and CrowdStreet Advisors. What I mean is that we have a highly experienced team of commercial real estate professionals supported by a deep team of technology experts, and that’s a pretty powerful combination. We can work with advisors to create truly unique products for their clients.
Prince: How is CrowdStreet Advisors helping advisors better serve their clients?
Chang: As I mentioned, we are focused on providing advisors with access, education, and hands-on support to enable them to help their clients gain exposure to a highly-differentiated asset class that we believe can serve as a complement to the existing core real estate investments held in traditional investment portfolios.
These private real estate projects are typically focused on growth strategies and have historically been less correlated to public market assets. We focus primarily on what we categorize as growth markets—secondary metro markets like Austin, Nashville, and Raleigh-Durham that have strong market fundamentals, ranking above national averages in key areas such as job and population growth, and that we believe offer attractive, risk-adjusted investment opportunities.
When advisors choose to work with us, they not only gain access to private commercial real estate through a variety of funds and services, they get access to our team of experienced professionals who provide support and the continuous market research and analysis advisors need to stay informed and deepen their understanding of CRE’s role in client portfolios.
Prince: How do you select CRE projects for your funds?
Chang: We have a dedicated cross-organizational team of professionals who engage in all aspects of sourcing, selection, and monitoring of CRE projects. Since its inception, CrowdStreet has evaluated over 5,500 real estate projects for its individual Marketplace and approved 650+ deals, or less than 7%. For its funds, CrowdStreet Advisors has selected only the top 3% of all potential opportunities, with C-REIT and thematic funds investing in just 1.2% of the overall projects evaluated—an indicator of our selective process.
Before an opportunity is approved, the team conducts rigorous due diligence on the sponsor as well as the individual project. This process is informed and further supported by our deep industry relationships, proprietary data, and real-time market insights gathered from our sponsor network.
Finally, the CrowdStreet Advisors portfolio management team is tasked with hand-selecting projects from CrowdStreet’s deal flow–projects they believe are attractive and capable of meeting each fund’s stated investment goals.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.
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