The month of March is said to come in like a lion and out like a lamb. CapitalFund Realty, the New York-based curator of real estate funds, kicked off the month with a bang with its launch of the world’s first online platform that lets individuals invest directly in institutional-quality real estate funds. For investors more lion-like, the new CAPFUNDR website will offer private funds with strategies that span multi-family, net lease, and retail properties, all at lower fees than non-traded REITs.
Access for Individual Investors
“Our real estate funds will give individual investors access to the same properties and the same quality of management that benefit institutions,” said CapitalFund Reality co-founder Edward C. Yu, in a recent statement. “We leverage technology and our expertise to provide investors with a selection of high quality institutional-style funds that offer affordable minimum investment amounts.”
CAPFUNDR’s first fund offering is the CAPFUNDR REIT Value Fund I. The fund, which is classified as a private equity (“PE”) fund rather than a non-traded REIT, will seek to capitalize on market inefficiencies by purchasing undervalued non-traded REITs. There are no brokerage commissions for buying or selling shares of the CAPFUNDR REIT Value Fund I, but it does have a $10,000 minimum investment and is available only for Accredited Investors. Annual management fees for the fund are 1.50%, and as with other fund-of-funds structures, this is in addition to any fees within the underlying non-traded REITs purchased by the fund.
“Non-traded REITs are a flawed model,” said Jean-Michel Wasterlain, another co-founder of the firm. “The fees they charge make it nearly impossible to produce the returns that investors expect.” But according to Mr. Yu, the CAPFUNDR fund can buy shares of non-traded REITs for less than fifty cents on the dollar, and at that price, they’re a good value for investors.
Extensive Real Estate Experience
Mr. Yu and Mr. Wasterlain are CapitalFund Realty’s co-CEOs, as well. They each have over a quarter-century’s worth of experience at real estate and REIT funds. Mr. Yu has held senior positions at Starwood Capital Group, CBRE Investors, and Prudential Real Estate Investors. Mr. Wasterlain was CEO of ORIX Capital Markets and CIO of NorthStar Realty Finance. The firm’s other co-founders, Joe Cane and Mirza Joldic, are CapitalFund Realty’s General Counsel and Chief Technology Officer, respectively.
“For individual investors who want to invest in real estate to diversify their portfolios, there have been limited choices,” said Mr. Wasterlain. “We are giving investors a better option with lower fees, credible management, and much more transparency.”