Company helps investment in portfolio of small neighborhood buildings by even smaller investors


From Bloomberg writer Jonathan LaMantia on the subject of CityShares: "Investors who pledge at least $100,000 to one of the program’s neighborhood-focused funds become partial owners of a group of buildings and share in the rental income.

"'One of the things we learned from talking to investors was a lot of people thought about value creation through the evolution of a neighborhood,' [founder Seth] Weissman, 31, said in an interview at a Harlem coffee shop.  Buildings will be renovated, with a focus on cost-saving upgrades such as converting old oil furnaces to gas, Weissman said.

"Weissman said he chose neighborhoods for the funds based on amenities renters look for, including easy access to transportation and job centers.  Bedford Stuyvesant and Harlem, in particular, are distinguished by their blocks of 19th-century brownstones and a sense of community that’s hard to replicate, he said.

"'In Bed-Stuy, you walk around and, people will be tending to their planters and you’ll look up and a cornice will be missing,' Weissman said.  'Clearly the building needs major work.  They may not have the resources to make those larger investments but they care.  They do what they can.  They say hello.'

"CityShares investors must be accredited under U.S. Securities and Exchange Commission rules, meaning they made at least $200,000 in each of the past two years or have a net worth of at least $1 million.  That’s more restrictive than crowdfunding, in which large amounts of money are raised through small contributions.  Weissman said his program also differs from such websites as Realty Mogul and Fundrise in that those companies distribute pledges to property managers and developers, while CityShares will buy and manage buildings directly. 

"Participants will collect quarterly dividends from leasing income and in about a decade should see the benefits of price gains as the properties are sold, Weissman said.  The goal for the first fund is an annual return of at least 12 percent over a seven- to 10-year timeline, the majority of which will come from rents, he said. 

"CityShares is the only way for property investors 'to get exposure to that appreciation and rental income outside of buying an apartment or buying a brownstone on their own,' Weissman said.  That’s 'a big check. It’s not a $100,000 or $200,000 check.'  The median sale price of a multiresidence townhouse in Brooklyn was $1.1 million in the second quarter, according to a report by the Corcoran Group.

"The program will offer participants advantages over buying shares of a real estate investment trust, including access to rent rolls, payment histories and other data on the funds’ buildings, Weissman said."  Full article here.