Current Statistics on Private Real Estate Investing

Realty Mogul has released the results of an extensive survey of real estate syndications, accumulating data from across 311 unique private placements and involving properties worth nearly $5 billion in total.

The data indicates that the average preferred return being offered to investors over the last 25 months in private real estate equity syndications was approximately 7.7%, with the most common figure being an 8.0% rate. The survey also shows that after investors are paid that preferred return, the transaction sponsors are typically paid an average “promote” (their extra share of upside, similar to a “carried” interest) of 29% of excess distributable cash flow, with investors dividing the remaining 71%.

“Part of our mission here at Realty Mogul is to provide increased transparency to the marketplace,” said Jilliene Helman, CEO of Realty Mogul. “Statistics like these provide insight into the otherwise opaque world of real estate private placements. Both investors and sponsors can benefit from this data to get a better idea of what is currently “market” in these commercial real estate transactions.”

“This survey greatly expands on our earlier studies, the initial one of which was one of the first times that any such data had been aggregated or provided publicly,” continued Helman. “This most recent survey, though, marks a quantum leap with its statistical significance. The data is pulled from 182 disparate privately held real estate investment companies, involving projects averaging $18.5 million in size. A survey like this that looks across properties worth nearly $5 billion in the aggregate marks a huge milestone in the development of online real estate marketplaces. We’re proud to have assembled this data and to make it available to the public.”

The survey also includes a discussion on the amount of real estate transactions done through the new Rule 506(c), which allows companies to advertise specific offerings. “We believe that data processing is a major competitive advantage for online marketplaces like ours,” said Helman. “We’re definitely contributing to the efficiency of real estate capital markets. As more and more sponsors – and borrowers, on the lending side – come to work with us, this efficiency will become more and more apparent. Already, the online real estate financing industry is on course for a record 2014.”

The full survey can be downloaded here.