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PeerRealty Becomes Latest Player in Real Estate Crowdfunding Market

PeerRealty Becomes Latest Player in Real Estate Crowdfunding Market


PeerRealty CEO Jordan Fishfeld said he wants the company to be a way for middle-market Midwest investors to invest in real estate. (PeerRealty photo)

PeerRealty, a Chicago-based real estate crowdfunding platform, opened an offering to accredited investors Monday, allowing them to buy a piece of a Belvidere shopping center at stakes of $5,000 and up.

Chicago-based Crosstown Capital Partners, the real estate investment company sponsoring the offering, is looking to raise $1 million in exchange for equity in Riverside Plaza, a 62,500-square-foot shopping center housing a Dollar General, Salvation Army and Rent-A-Center.

The offering had raised more than $100,000 as of Tuesday afternoon.

PeerRealty investors receive membership units in a real estate investment company’s, or sponsor’s, offering. In the current offering, a $5,000 investment would get an investor 50 Class A membership units out of 10,000 outstanding Class A units. Investors stand to receive specified rates of return on any profits from rental income and property appreciation.

PeerRealty illustrates a growing interest in this type of fundraising, a more complex take on the product- and idea-based crowdfunding done on sites like Indiegogo and Kickstarter. State Rep. Carol Sente, D-Vernon Hills, filed legislation in February that would allow Illinois companies to sell stock through crowdfunding, which proponents said would increase access to capital for startups and small businesses.

The federal 2012 Jobs Act cleared the way for a slew of real estate crowdfunding sites including CrowdStreet, based in Portland, Oregon; Loquidity in Grand Rapids, Mich.; and now PeerRealty.

Matthew Baumann, co-founder of Crosstown Capital Partners, said it’s the firm’s first time working with a real estate crowdfunding site, and he sees big potential.

“It’s giving people who might ordinarily not have the opportunity [to invest] to get in and experience it,” he said.

PeerRealty CEO Jordan Fishfeld launched the company in early February with co-founder Juan Hernandez; it's based at real-estate technology accelerator Elmspring within 1871 at the Merchandise Mart. Fishfeld said he wants the company to serve as a way for middle-market Midwest investors to buy into real estate.

Individuals must meet Securities and Exchange Commission thresholds for annual income ($200,000) or net worth ($1 million), meant to screen for investors savvy and well-off enough to take on risk, and verify their status through the PeerRealty site. Investor dollars go into an LLC that invests directly in the asset holding company, Fishfeld said.

Fishfeld said he hopes to have two to five deals operating a month in various asset classes.

PeerRealty will participate in Elmspring’s demo day in mid-April, marking the end of the company’s time in the accelerator program. Elmspring co-founder Tom Bretz said PeerRealty has come a long way in three months.

“There’s a big difference in building a website and actually funding a property,” Bretz said. “Relative to other crowdfunding sites out there, this is a very good indicator of how serious they are and how much they have their act together.”

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