20 January 2015, Cape Town: Foreign investors are increasingly investing in the US Real Estate market attracted by the surging US dollar and the yields that real estate investments deliver. Until recently, South African investors had limited access to the burgeoning commercial property market currently valued at $12 Trillion total.
According to Real Analytics foreign investments in the US commercial real estate market was expected to reach $10 billion by end of 2014. Major interest from Chinese investors in particular has driven a 10-fold jump in the market (2012-2013). For South African investors direct access to this market has until recently been limited, but as of January 2015 this changed with the launch of the first commercial real estate investment platform and marketplace for International and US-based accredited investors seeking long-term, stable growth.
The brain-child of two South African businessmen, RealtyWealth.com was successfully launched in the US in 2014. Now available in South Africa, it gives South African investors the opportunity to securely invest in institutional quality, commercial real estate known as Single Tenant Net Lease Properties (STNL) and backed by corporate lease agreements from credit rated tenants such as McDonalds, KFC and Walmart. These STNL investments are considered ideal for absentee, passive foreign investors.
RealtyWealth’s investment platform uses a crowdfunding model to securely raise funds from international investors and US-based accredited investors. The crowdsourced funds are pooled and securely held within an FDIC insured escrow bank account at JPMorgan Chase. The funds are only released by the title company (conveyancers) once the investment property is purchased, and the investment process is complete.
Crowdfunding has seen significant development within the US real estate over the past six months. It is a process where investors pool their funds and invest in commercial real estate properties. Since 2012 over $700M has been raised by Real Estate Tech Startups showcasing the appetite for these investment strategies.
REITS, U.S. UHNW investors, Family Offices and Hedge Funds have been taking advantage of STNL investments for decades. With investment access more readily available through investment portals such as RealtyWealth.com, accredited investors across the US and global investors are now able to directly invest in STNL properties.
“STNL investments are ideal investment for hand’s off foreign investors” explained Bryan Smith, CEO. “The investment properties are secured by long-term leases where the credit-rated corporate tenant is responsible for
“In the unlikely event that the corporate tenant defaults on the lease, the investors still retains the underlying property. Most leases have contractual rental increases over the term to keep up with inflation and investors are able to write off property depreciation against lease income” Smith continued.
“STNL products are particularly attractive to South African investors in that they offer long-term, corporate backed, passive income with an inflation and currency hedge,” explained Sam Vogel, co-founder.
“A key feature we designed for investors is RealtyWealth.com’s dashboard that allows investors to review RealtyWealth’s US-based properties, make investments, track portfolios and seamlessly receive statements, earnings and tax computations all online. RealtyWealth.com is undergoing regulatory approval in SA and offers South African investors a straightforward, effective and secure way to invest in the US Commercial Property market,” concluded Vogel.
Bryan Smith is a Commercial Real Estate Developer with over 10 years commercial real estate experience at an executive level (South Africa, USA) and
Sam Vogel is an international financier previously with Nedcor and resident in the US for 14 years.
STNL Lease Investments Explained video : SEE VIDEO