real estate crowdfunding 2015 - pwc presentation

What would you like to grow?

whatwouldyouliketogrow.com.au

CrowdfundingReal Estate

April & May 2015

How will the crowd createopportunities in real estate?

The adviser’s perspective

2

Steven MaarbaniPartner, Venture Capital & Private EquityPwC



Jim Keys

●1999 - IPO valuation of $4.8bn

●Peak valuation of $8bn with 9,000 stores in 7countries & 60,000 employees

●1998 - Netflix launched

●2003 - Netflix posted first profitof $6.5m

●2008 - “I’ve been frankly confused by this fascination thateverybody has with Netflix … Netflix doesn’t really haveor do anything that we can’t or don’t already doourselves.”

●2010 – Blockbuster filed for bankruptcy in the US



Examples

INC

UM

BE

NT

DIS

RU

PT

OR

TRANSPORT MEDIA TRAVEL ENT’MENT RETAIL



Unpacking disruption

●Access, choice & control

●Greater transparency

●Process improvement

DIS

RU

PT

OR

●Cost reduction

●Trust



Areas of disruption

Search &Acquisition

Funding &Investment

Development

Management&

Administration



What is RECF?

RECF =

Real Estate (Asset)+Finance (Product)+Technology (Distribution)

The difference is the user experience,and technology is the key.



Global growth of RECF

● RECF is one of the fastestgrowing crowdfunding sectors

●85 platforms across Asia, US,UK & Europe

Source: Massolution, 2015CF-RE Crowdfunding For Real Estate Report 2015

$19 m

$396 m

$1.01bn

2012 2013 2014 2015

$2.57bn$250bnby 2020



RECF Models

Category

Stage

Security

Residential

Commercial

Industrial

Development

Off-the-plan

Existing

Debt

Equity

Hybrid



VC investment in real estate

●$118m invested in 11 real estate startups in FY14

●Higher volume & levels of investment since 2000

●$41m invested in 2 RECF platforms –RealtyShares ($10m) & Fundrise ($31m)

0

5

10

15

$0

$50

$100

$150

2008 2009 2010 2011 2012 2013 2014*Investment (in millions) Number of financings

Source: Dow Jones VentureSource



The future of RECFin Australia

●An increase in the number of RECF platforms

●Increase in property developer engagement

●Early adopters will be SMSFs and investorswho are priced out of the market

●Model variation and category diversification

Netflix is here. It’s your move.

The fund manager’s perspective

12

Tim HeasleyCOO, Artesian Venture Partners& VentureCrowd

@v_crowd

The Old World is Disappearing

Stockbroker BankerReal Estate Agent

Crowdfunding: Cutting out the Middleman

Crowdfunding Platforms

Equity Property

Credit

Rewards

VentureCrowd distinguishing characteristics:

• Multi-asset class• Agnostic platform for sourcing deal flow• Expert partners for pre-screening• Encourage responsible investing e.g.

diversification

Evolution of VentureCrowd Deals

VentureCrowd’s $1.2M raise for ingogowould have ranked in the top 10 equitycrowdfunding deals in the US in 2014

$50K

$363K

$505K

$1.2M

$4M

Australia Real Estate

HousingAssets

GDP Ratio

Australia

$4.86 trillion $1.49 trillion 3.26

UK £4.28 trillion £1.52 trillion 2.82

Canada $3.14 trillion $1.77 trillion 1.78

USA $18.45 trillion $15.98 trillion 1.15

ResidentialReal Estate$4.86 trillion

CommercialReal Estate$0.7 trillion

AustralianListed Stocks$1.4 trillion

AustralianSuperannuation

$1.4 trillion

~3.3x size ofAustralian economy

Housing Affordability

Barriers of Entry to Private Property Investment

$500Kaverage price

of a onebedroom

apartment in agood Sydney

location

$2.2Kmonthly

mortgagepayment on

$400K loan at4.5%

$18Kstamp duty in

NSW on anew$500Kinvestment

property

$100Kminimumdeposit

required for80% LVRmortgage

Individual private property investment:

• inherently fragmented and inefficient• few ways in which to access compared with

bonds/equities• investors generally rely on their own networks

to access quality deals• minimum ticket of at least $50,000 -100,000• time and effort required to actively manage and

operate the property• concentration risk

$2Kconveyancingfee and other

disbursements

Property Trusts:

• provide more diversification & liquidity• reduce transparency and control• do not offer the “thrill” of investing in a single

property or the “touch it, see it, feel it” qualitythat has long made property the favouredinvestment in Australia

A New Alternative

Investing via VentureCrowd Property:

• invest as little as $100• eliminates most of the barriers or difficulties involved with traditional real estate investing• provides a level of access and transparency that has never before been possible for real estate• greatly reduces the time and capital requirements needed to invest• allows investors to invest more quickly• allows investors to allocate the same $50,000 -100,000K they may otherwise put into a single property across

multiple properties in different geographies thereby achieving greater diversification.

Investor Property

VS.

Incumbents

Banks

Real EstateAgents Conveyance

PropertyManagement

PropertyTrusts

$

$

$$

$

$

Become Your Own Property Mogul

First Partnership & Properties

The developer’s perspective

23

John CarfiCEO, Residential DevelopmentMirvac



CrowdfundingReal Estate

Panel Discussion

Steven Maarbani – Partner, PwC

John Carfi – CEO Residential Development, Mirvac

Tim Heasley – COO, Artesian & VentureCrowd

How will the crowd createopportunities in real estate?

real estate crowdfunding 2015 - pwc presentation

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