Investors turn to CrowdStreet, raising more than $25 Million to renovate empty office building in Downtown Atlanta
ATLANTA and PORTLAND, Ore., Sept. 17, 2019 /PRNewswire/ -- CrowdStreet, Inc. ("CrowdStreet"), a technology provider with an online marketplace for direct equity investment in commercial real estate (CRE), today announced the largest, fastest crowdfunding event in its history, raising $25 million in three hours on its platform for an Opportunity Zone redevelopment in Atlanta led by Parkway Property Investments, LLC ("Parkway").
Parkway will use the proceeds of the crowdfunding to acquire and redevelop the property. Combined with other equity and anticipated debt, the total investment in the property is projected to be approximately $80 million.
"The 100 Edgewood deal is institutional quality, so we knew it would be attractive to an institutional investor. At the same time, we thought it would be a great opportunity to try online syndication, so we decided to work with CrowdStreet," said James R. Heistand, Chief Executive Officer of Parkway. "The speed in which CrowdStreet's investors committed to the funding target was pretty amazing, as we hit the goal of over $25 million in offers in just a few hours. It certainly feels like crowdfunding has matured to the point where it needs to be treated as a serious channel of investment."
"This project received offers in record time at the pace of $1 million every seven minutes. We believe the success of the raise is due in large part to Parkway's reputation as an experienced, high-performing owner and operator of office buildings in the southeast. Additionally, the raise happened the same week that the Dow dropped 800 points -- its worst percentage drop of the year and fourth-largest point drop of all time," said Ian Formigle, Vice President of Investments for CrowdStreet. "Despite market volatility, investors are seeing how a looming recession doesn't mean they have to withhold or remove their investments. We've learned from historical trends that the NCREIF and NAREIT, the two major CRE indexes, have low historical correlations to the S&P 500. This means that when you add CRE to a diversified portfolio you can increase its Sharpe Ratio, which means targeted higher returns with less assumed risk."
"In order for an opportunity zone investment to get my attention, it must stand on its own merits, regardless of any tax advantages it may present. The 100 Edgewood project as presented strikes me as an investment that truly is in the spirit of the opportunity fund program: an exciting business opportunity that is part of the revitalization of a great city," said Tim Ports, one of the investors who participated in the funding through CrowdStreet. "The fact that I would have found the investment compelling even if it was not in an opportunity zone is just the icing on the cake. I look forward to seeing more deals of this quality and need to tip my hat to CrowdStreet for their vetting efforts and for the democratization of the process of investing in commercial real estate."
Opportunity Zones are defined by economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment. Investors who participate in Qualified Opportunity Funds may be able to defer capital gains through 2026 and receive up to a 15 percent tax reduction on current gains, while simultaneously eliminating capital gains taxes on any returns generated by the Opportunity Zone investment, provided it is held for at least 10 years.
100 Edgewood is a 17-story, 306,000 square foot Class B office building, adjacent to Hurt Park and Georgia State University in downtown Atlanta, was originally designed by internationally renowned architectural firm Skidmore, Owings & Merrill and constructed in 1965 as the Atlanta regional headquarters of Hartford Insurance Company. Parkway will be redeveloping the building as a modern Class A office building with amenities to attract high-quality tenants desiring creative and modern style offices.
CrowdStreet recently crossed $700 million invested in 2019 by thousands of investors from almost every state across the country. Hundreds of real estate firms -- from developers seeking financing for new projects to companies that specialize in improving or managing existing buildings -- have conducted offerings on the CrowdStreet Marketplace.
CrowdStreet operates an award-winning online commercial real estate investment marketplace that gives accredited investors access to institutional-quality offerings. CrowdStreet technology allows sponsors to raise capital through online fundraising and manage their investors, both on the Marketplace and with a SaaS solution. CrowdStreet is helping to create a community where individual accredited investors and CRE firms can work together to build wealth through commercial real estate. For more information, please visit www.crowdstreet.com.
Parkway is a privately owned, full service real estate investment firm led by a team with a strong track record of investing in high-growth markets across the U.S. and across economic cycles. Parkway owns, operates and manages institutional quality commercial office assets throughout the Sunbelt region. In addition, Parkway identifies and structures acquisitions and provides best-in-class property and asset management, leasing, accounting and construction management services. Parkway currently operates approximately 11.4 million square feet of high-quality office properties located in attractive submarkets in California, Texas, Florida, Georgia, North Carolina and Pennsylvania.
Melissa Hourigan (National)
Cary Brazeman (Real Estate)
CRELIX Marketing Partners
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