Left to Right: Darin Renton (Partner Stikemans LLP), Don Mcdonald (CEO Waverley), Amar Nijjar (CEO R2Crowd), D’Arcy McGee (Evton Capital partners) & Zulf Karim (Head of BD at TMX).
RealCapital 2016 conference was held at Metro Toronto Convention Centre and focused on Commercial Real Estate Specific key issues and trends by bringing together owners and investors with sources of public and private equity investment and debt financing in the Canadian real estate market.
Our own founder of Real Crowd Capital Inc, Amar Nijjar, moderated a very insightful panel on real estate finance and Fintech. Over 550 executives from across Canada attended, but perhaps the highlight of the conference was a “Forward looking” session on “Crowdfunding”. Online capital raises and “financial disintermediation” is here to stay. It’s not a matter of “if” but a matter of “how fast” and “how much”. Following themes were addressed in the session:
- Technology is changing real estate, and the crowdfunding industry isat the forefront of this change. The panelists explained that crowdfunding platforms are taking full advantage of the efficiencies offered by technology and by big data.
- Expect minimum investments to come down in the near future. Panel members argued that the low minimum investment requirement and transparency on crowdfunding platforms is vital for investors to properly diversify their portfolios. CF exemption is not expected to be used much.
- Real estate crowdfunding offers several advantages to investors that REITs fail to offer. One of the most common questions we receive from potential investors is about the difference between real estate crowdfunding and REITs. Real estate crowdfunding (as compared to publicly traded REITs) is true diversification outside of the public securities market and investors get to select the deals [they] want to be in.
- Real estate crowdfunding offers unique benefits to sponsors and developers. Many attendees at the meetup were potential sponsors seeking to learn more about crowdfunding as a source of capital for their deals. Crowdfunding allows real estate sponsors to tap a much larger base of investors to fund projects.
- Securities regime and its complex nature with 13 different provincial and territorial regulators perhaps is one of the single biggest challenge that portal owners will need to understand and learn to work with going forward.
Untapped exempt market distribution in 2014 alone was around $120B and if RE crowd funding can tap in to even 1% of that – it will be a huge success.