EquityMultiple Growth Update — Q4, ’21

Over the past two quarters, we have worked hard to evolve our ecosystem of investments in a profound way. We are excited to share some recent news and track record updates.

Year to date (as of 12/14/21) we have distributed more than $77 million* to investors in returns across all investments, more than all prior years combined since EquityMultiple’s inception. Teams across EquityMultiple have aligned around several major initiatives that we believe will open new doors for our investors, detailed below.

Two Exciting Perpetual Investment Products

We brought our first real estate investment to EquityMultiple investors in late 2015: an equity investment in a mixed-use space in Brooklyn. Over the past six years, we’ve expanded into new investment structures to better serve the needs of our investors — preferred equity, debt, and private funds. In Q3, we launched two new offerings that expand the ecosystem of complementary investment options offered through EquityMultiple.

Our First Co-Managed Fund

In early August of this year, we opened our first co-managed fund offering. As opposed to our prior fund opportunities, the REM Fund’s investment committee is comprised partly of EquityMultiple’s senior personnel, and EquityMultiple directly administers the fund. This means that the EquityMultiple team directly evaluates, and is directly involved in the approval of assets incorporated into the fund.

Entry into the REM Fund is offered on a rolling basis — each time the Fund invests in additional assets, we will open the Fund to our investors for a new round of participation. This provides maximum transparency because investors have the opportunity to see each investment currently in the fund and helps us seek the highest possible potential yield by aligning fund size to fund revenue.

Alternatives to Savings

In late August of this year, we launched our first “alternative to savings” product, designed to complement our real estate investment offerings and provide investors an option for a short-term, high-rate alternative to bank savings products. These diversified notes are backed by certain of our real estate investments, and provide investors a means of potentially tapping into compelling yield at a time when rates on savings accounts and CDs are near historic lows.

EquityMultiple’s alternative to savings products offer the following features to investors:

• Short terms — with 3, 6, or 9-month terms, EquityMultiple investors can benefit from flexible liquidity and new options for managing cash.
• Low minimums — these diversified notes will typically carry minimums of just $5,000.
• Zero fees — notes are fee-free to investors and EquityMultiple backs each note with First-Loss Protection, where EquityMultiple co-invests behind investors in each notes offering.

We have continually evolved our product offering to meet the needs of our investors, and we are seeing validation for this approach in the form of increased funding velocity. In the third quarter, we will complete our two largest raises ever, while the first three series of our alternative to savings products have been oversubscribed by 70%.

We are thrilled to offer products to our investors that are so popular, as evidenced by the rapid pace of subscription. Our responsibility now is to ensure that investors have sufficient opportunity to consider these and other offerings, and that we match the supply of future diversified note and Fund allocations to meet with the substantial demand that we are seeing. In the near future we will be introducing a more streamlined, personalized investment funding process, designed to give you more time to evaluate and better access to the types of investments that best fit your objectives.

Transitioning to an RIA

For over five years, EquityMultiple offered investments through a broker/dealer relationship. As of August, 2021, EquityMultiple has transitioned to operating primarily through a registered investment advisor (RIA). While the benefits to you as an investor may not be immediately obvious, this transition was done deliberately in order to be able to expand our investment options and deliver better information around each investment.

A few highlights:

• New products: Short Terms Notes and other new investment products on our roadmap can only be offered by an RIA.
• More institutional offerings: Expanding our pre-funding capacity lets us pursue larger investments and attract high quality operators who have other options for capital in this competitive market.
• Greater return transparency: Going forward, we are able to provide detailed financial and return forecasting more readily so investors can more easily evaluate investments.

Growth Recognized

Inc. recently recognized the 5,000 fastest growing companies in America**. We are pleased to report that EquityMultiple was placed in the top 15% of Inc’s “5,000 Fastest Growing Companies in America”; as shows in the below chart, EquityMultiple is growing at a faster pace year-over-year than several other leading real estate investment platforms.

Over the past two years, EquityMultiple’s workforce has grown by over 50%, supporting key functions of asset management, underwriting, and finance & operations. While awards are nice, we are even prouder of the advancements of the company to better meet the needs of our investors.

A Current Snapshot of the EquityMultiple Portfolio

A real-time look at EquityMultiple’s investment portfolio makeup is available on our Track Record utility. EquityMultiple offers investments across core commercial real estate property types of multifamily, industrial, and office (and retail to a much lesser extent). We also offer a diverse array of investments into non-core property types, particularly those that offer a counter-cyclical or recession-resistant investment thesis.

We continue to evaluate investments across property types to provide maximum diversification potential. However, given present macroeconomic conditions, our originations team is leaning harder than usual into multifamily, historically the least volatile and most inflation-resistant real estate asset class. Our investors seem to agree: in a recent survey, 72% of investors polled stated that Multifamily is their priority asset class, with 42% stating that Class A multifamily is most appealing, and 30% stating that Class B, Class C, or workforce housing is most appealing.

Here is a detailed breakdown of our current asset allocation as of December 14th, 2021:

• Multifamily — 32%
• Condo — 11%
• Office — 10%
• Multi-Asset — 9%
• Hotel — 6%
• Car Wash — 5%
• Mixed Use — 5%
• Industrial — 5%
• Manufactured Housing Community — 3%
• Medical Office, Healthcare, and Senior Housing — 3%
• Single-Family Rentals (SFR) — 2%
• Student Housing — 4%
• Self-Storage — 2%
• Land — 2%
• Retail — 1%

Other “movers” in the bunch: Hotel and Retail each dropped a point, while self-storage and medical-related assets each gained a point.

Our diverse portfolio of assets spans 89 geographic concentrations across the United States, reflecting a network of 73 lender and sponsor partners. (Additionally, EquityMultiple investors have recently gained access to Fund investments that span the entire country). EquityMultiple investors have now participated in real estate transactions totaling over $3.7 billion in capitalization. EquityMultiple will continue to offer a diverse set of investments across property types, geographies, and sponsors/operators.

As always, please let us know if you have any questions at ir@equitymultiple.com. To view live investments, please log in to the EquityMultiple platform.

*As of 12/6/21, includes all distributions from cash-flowing investments and principal repayments issued since 1/1/21. Past performance does not guarantee future results. **Source: In.com as of 12/13/21: “Introducing the Inc. 5000 Fastest-Growing Private Companies in America” — https://www.inc.com/inc5000/2021 This document is for informational purposes only and is not an offer or solicitation to purchase or sell securities. Investing involves risks, including the potential for principal loss. There is no guarantee that the strategies and services will be successful or outperform other strategies and services. Certain assumptions may have been made in connection with the analysis presented herein, and changes to the assumptions may have a material impact on the analysis or results. Past performance is no guarantee of future results. The investments discussed herein may be unsuitable for investors depending on their specific investment objectives and financial position. Investors should independently evaluate each investment discussed in the context of their own objectives, risk profile and circumstances. All opinions expressed herein constitute judgement as of the date of this article and are subject to change without notice. Statements made are not facts, including statements regarding trends, market conditions and the experience or expertise of EquityMultiple, are based on current expectations, estimates, opinions and/or beliefs of EquityMultiple. Such statements are not facts and involve known and unknown risks, uncertainties and other factors. Past events and trends do not predict or guarantee or indicate future events or results.

Originally published at https://www.equitymultiple.com on December 14, 2021.