The city’s top real estate-focused private equity investor is turning to a new source of capital for its projects: crowdfunding.
Joseph Sitt’s Thor Equities, which bought $2.8 billion worth of New York City real estate last year, is working on launching a crowdfunding platform.
“Invest Thor, it’s going to be called,” Thor CFO Michael Schurer revealed earlier this morning during a panel discussion on equity raising hosted by the tax-advisory firm WeiserMazars.
Lawmakers in Washington relaxed regulations allowing for online crowdfunding in 2013. In 2014, overall investment in U.S. real estate through crowdfunding crossed the $1 billion mark, and is expected to hit $2.5 billion in 2015, according to research and advisory firm Massolution. While prominent players in the space like Fundrise and Realty Mogul pool dollars to invest with sponsors, Thor will follow in the footsteps of real estate firms like Prodigy Network and Carlton Group that raise funding for their own projects.
“It’s remarkable to me that in the span of 18 months of Title 2 being available for use that we’ve gone from a quality firm like Fundrise and what they’ve done to Thor Equities finding this marketplace interesting and wanting to be in it,” securities attorney and crowdfunding expert Douglas Ellenoff said.
“It’s validating, but at the same time people are worried it creates too much competition,” he added. “In the grand scheme of the overall real estate market, it’s nada.”
And while the competition is heating up as was in evidence at The Real Deal’s New Development Showcase and Forum, Fundrise president and co-founder Dan Miller said he does not think Thor’s platform will have a big impact on the crowdfunding market.
“[Thor’s] strategy will likely provide additional capital to their firm,” Miller said, “but it’s not a fundamental shift towards being a centralized platform for all qualified real estate companies.”