EquityMultiple Growth Update – Q4

October 22, 2020
By EQUITYMULTIPLE Staff

Growth of the EquityMultiple Portfolio Amid Market Upheaval

Update 12/30/2020:

The latest Investor Update Letter from CEO & Co-Founder Charles Clinton:

As we close the door on 2020, I speak for all of us at EquityMultiple in saying “good riddance” to a year of unforeseen challenges and hardship for so many. While we expect continued turbulence in the first half of the year, as the country deals with political turnover and the vaccine rollout, we remain optimistic about the opportunities ahead. As is often the case, a difficult year for the country sets the stage for a fruitful year for investors.

Consumer sentiment and the “real” economy will be particularly at odds in 2021. The surging stock market is a perfect example – the market sets records while P/E ratios strain credulity. Pent-up demand will be unleashed as the country fully reopens but it may come too late for businesses that are already nine months into a recession. These are prime conditions for value-focused investors. The bottom line of all this is simple: the value proposition of real estate – yield, appreciation, and relative stability – should be particularly strong in 2021.

We feel fortunate to be heading into the new year with much positive momentum. We recently completed a company capital raise to fuel expansion in 2021 while focusing on the needs of our investor community. I am immensely proud of the team at EquityMultiple for all that was accomplished this year amid adverse circumstances. Here are a few brief highlights as we look back at 2020:

  • The EquityMultiple portfolio continues to grow: Investors have participated in commercial real estate projects with a total value over $3 billion.
  • Despite challenging economic conditions, EquityMultiple’s Asset Management Team has continued to work tirelessly for investors throughout the year. The average return on investments exited in 2020 was a 14.5% IRR*, strong returns in a turbulent market.
  • We paid over $32 million in distributions to our investors this year, representing 2.5x year-over-year growth in distribution volume. EquityMultiple has now returned over $60M in distributions to our investors in total.
  • Our Product & Engineering Team revamped our Resource Center and Invest page for smoother navigation and better discoverability of educational resources, including articles specific to live investment offerings.
  • We expanded further into funds, working with some of the most respected firms in the industry.

In 2021, we have ambitious goals for broadening our investment offerings, further developing our technology, and growing the EquityMultiple team. As always, we look to our investors to inform improvements to our platform and growth in our investment pipeline. We would love to hear any feedback you have and discuss your investing goals for the new year. At any time, please feel free to reach out to ir@equitymultiple.com with any questions or feedback.

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.

Here is a detailed breakdown of our current asset allocation as of October 21st, 2020:

This diverse portfolio of assets spans 51 geographic concentrations across the United States, reflecting a network of 62 lender and sponsor partners. This multi-dimensional diversification should position investors well as the economy recovers. EquityMultiple will continue to offer a diverse set of investments across property types, geographies, and sponsors/operators.

Strategy Diversification

This diverse portfolio of assets spans 71 geographic concentrations across the United States, reflecting a network of 71 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 $2.92 billion in capitalization. This multi-dimensional diversification should position investors well as the economy recovers. EquityMultiple will continue to offer a diverse set of investments across property types, geographies, and sponsors/operators.

Below is a summary of the current exposure of EquityMultiple’s portfolio to the various portions of the capital structure:

the capital stack visualized

From the bottom to the top of the capital stack:

  • Senior Debt: 12%
  • Mezzanine Debt: 9%
  • Preferred Equity: 45%
  • Common/JV Equity: 34%

Moving Forward: Our Approach as the Recovery Takes Shape

As always, EquityMultiple encourages investors to take a diversified approach to real estate investing, facilitated through low minimums and a simple investing process. Diversification is all the more critical in a fluid macro environment. For more on our outlook regarding market dynamics and strategies EquityMultiple may pursue in coming quarters, please review this discussion with Marious Sjulsen, Co-Founder & Head of Real Estate, and Milan Parekh, Senior Director of Real Estate.


As EquityMultiple CEO Charles Clinton noted in a letter to investors in April, the market disruption created by the global pandemic will ultimately translate to widespread asset repricing and new opportunity for real estate investors. 

Each new investment offering will contain a section detailing the strength of the investment thesis in the context of current market dynamics. At any given time, the set of live investment on the EquityMultiple platform is curated to offer diversification during what is likely to be a tumultuous time for the economy writ large. Should you have any questions, or wish to discuss any particular offering, please schedule a time to speak with our Investor Relations Team.

 


*Past performance is not a guarantee of future results.

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