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The company's philosophy is that by partnering with the most experienced and successful managers in private equity real estate investing, and by offering an element of diversification that is lacking with single-asset deals on other platforms, investors will be in the best position to achieve strong risk-adjusted returns on their capital.
If you're interested in real estate crowdfunding but don't want an entire investment of $25,000 or more tied to a single commercial property, CityVest could be the solution for you. The platform only offers diversified real estate investment funds, which it refers to as "access funds," that are managed by some of the most successful private equity real estate managers in the business.
Transparency - CityVest allows investors to browse access funds and review investment information without requiring any up-front registration whatsoever. This is somewhat unique in the crowdfunding space, especially when it comes to investments for accredited investors.
Investment dashboard - CityVest has a user-friendly investment dashboard that allows the investor to review information about distributions, quarterly reports, and tax documents in a well-organized format.
SDIRA Investing - CityVest allows investors to use self-directed IRAs to invest on its platform. Not all crowdfunding platforms allow this.
No individual deals - Some investors simply prefer to invest in individual real estate deals, which CityVest does not offer. While its fund-focused approach is certainly a differentiator, if you want single-asset deals, CityVest isn't the place for you.
High minimums- A $25,000 minimum investment (and far more for many of CityVest's funds) might be out of reach for many investors.
Accredited only - CityVest only offers funds to accredited investors, which typically means people with at least $1 million in net worth or annual income of over $200,000 per year ($300,000 with a spouse).
High & complex fee structure: Kudos for being transparent about its fees, and there are no out of pocket fees for investors. However, the unique fee structure CityVest has can be incredibly high depending on how much is raised and how many people participate in a given deal.
Incredibly long holding periods with no secondary market: Anyone looking to make an investment in real estate should be prepared to keep their money locked into a deal for a long time. That said, the holding periods for some of CityVests deals are much longer than most other platforms -- up to 10 years -- and there is currently no secondary market should you need to cash out unexpectedly.
CityVest is a legitimate real estate crowdfunding platform and is a financially sound company.
CityVest has $2 million of capital, and investors include the former president of a Goldman Sachs trading division and the former Chairman of JPMorgan Private Bank. The company is currently raising additional capital to offer investors a liquidity option, as well as to allow CityVest to participate in offerings alongside investors.
CityVest has completed capital raises for 10 access funds so far. To date, none of CityVest's funds have reached their maturity date, as they have terms ranging from three to eight years. All of CityVest's 10 completed access funds are currently making distributions to investors and none have lost money. The funds are targeting annual IRRs in the 12%-20% range, and CityVest specifically targets managers with impressive track records of success.
Founder and CEO Alan Donenfeld has a long history as a financial services entrepreneur. He founded Paragon Capital, a private investment firm, and is the president and founder of Bristol Investment Group. Other members of the team have extensive investment industry experience. CityVest's management team has quite a bit of skin in the game, as key executives own 65% of the company.
CityVest screens more than 700 real estate private equity funds each year to find those that meet its standards for size, quality, performance, governance, and other criteria. The company then hires a third-party due diligence firm to write a report on these funds, which it publishes on the CityVest website.
Specifically, CityVest looks for these characteristics from its access funds:
Currently, CityVest is only open to accredited investors. This means that at least one of the following criteria needs to apply:
The minimum investment is set for each individual access fund, but the smallest minimum on its platform is currently $25,000. However, it's worth noting that the majority of the access funds that CityVest has closed had $50,000 minimums and one multifamily fund had a minimum investment amount of $250,000.
As far as crowdfunded real estate investment platforms go, these minimums are certainly on the higher end. But they are in line with what many other accredited-only crowdfunding platforms offer.
CityVest doesn't charge any direct fees to investors. Rather, it makes its money from the access funds listed on its platform. And the company has three different fees it collects:
These fees are disclosed in the Terms section on each investment fund's platform listing.
This fee structure makes sense when the CityVest raises a lot of money for a fund and the amount each investor puts in is high. If someone puts in, say, $250,000, then that $500 per investor per year is about 1% of the initial investment. Not great, but not unreasonable.
If a deal is small and each investor only puts in the minimum for a deal, though, then the fee structure starts to become a bit out of hand. That same $500 annual fee per investor, per year implies if an investor puts $25,000 into an access fund for five years, the fund will have to pay $2,500 -- or 10% of its investment -- to CityVest in addition to the 0.75% of net asset value per year and the $50,000 upfront fee.
Another potential negative is that CityVest doesn't participate as an investor in any of the deals, nor does its compensation depend on the profitability of each fund. So, if a fund loses its investors' money, CityVest still collects the same fee structure as with a successful investment.
I'd prefer to see some sort of financial incentive to deliver superior returns, and to be fair, CityVest is raising additional capital for the specific purpose of being able to participate in investments alongside investors.
CityVest's funds each set their own IRR target, which is clearly stated on the site. IRRs for all 10 funds completed by the platform are targeted in the 12%-20% range.
While CityVest specifically targets managers with impressive track records of success, none of CityVest's funds have reached their maturity date, as they have terms ranging from three to eight years. So it's difficult to predict how much investors will actually get. All of CityVest's 10 completed access funds are currently making distributions to investors and none have lost money.
At this time, there isn't a secondary market for CityVest investments. Each fund has a targeted term of three to eight years, so investors should prepare to hold for the duration.
However, it's worth noting that CityVest is currently raising additional capital, and one of the stated purposes is to create a liquidity option for investors. So, this could change in the not-too-distant future.
At this time, CityVest doesn't have a mobile app. While it would certainly be a nice feature, few crowdfunding platforms offer mobile app functionality. However, it's worth noting that CityVest's website is mobile optimized.
Like any equity-based real estate investment, there's always a possibility that investors will lose money. It's worth noting that all of CityVest's 10 completed access funds are currently making distributions to investors, and none have lost money. However, no deal on CityVest’s platform has reached its stated holding period.
Fortunately, there are also a few safeguards in place that mitigate any risks:
In a nutshell, CityVest's use of third-party firms and administrators is above and beyond what most peers do and ensures that CityVest's success or failure won't play a role in the returns of each investment fund.
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FORWARD-LOOKING STATEMENTS The presentation at the CityVest.com website includes information provided to CityVest by the fund being described. It contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express fund manager’s current views concerning future events, trends, contingencies or results, appear at various places in this presentation. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “targets,” “plans,” “may,” or other similar words (including their use in the negative). Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this presentation. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause the fund’s actual results to differ materially from those expressed or implied in forward-looking statements include, among other things: ■ Increases in the Company’s borrowing costs as a result of inflation and increasing interest rates and other factors; ■ Changes in real estate market and general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s or revenues, earnings and Offering sources; ■ The ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its units on the same or better terms in the event of nonrenewal, including in the event of a recession; ■ Our ability to make acquisitions and dispositions and successfully integrate the businesses we acquire; ■ The Company’s limited operating history; ■ The Company’s success in implementing its business strategies; ■ The nature and extent of future competition, including new construction in the markets in which the Company and its facilities are located; ■ The Company’s reliance on key personnel; ■ The Company’s reliance on third-party vendors of technology, in particular the technology used to process and collect payments, or in the Company’s self-service kiosks or unmanned onsite operations and management; ■ Risks associated with the lack of liquidity of the Company’s securities; and ■ The impact of litigation or any financial, accounting, legal, tax or regulatory issues that may affect the Company or its tenants. The factors noted above are not exhaustive. The Company operates in a dynamic business environment in which new risks emerge frequently. Further information about the Company’s businesses, including information about factors that could materially affect its results of operations and financial condition, is contained in the Company’s Private Placement Memorandum, which you should read before deciding to invest.