EquityMultiple provides a simple way to invest in real estate. Real estate investing is inherently complex, however. We embrace the challenge of simplifying our investing experience while offering the right level of information for you to make sound choices.
We have reconstituted our offerings into three investment pillars — Keep, Earn, and Grow — to help you more easily navigate our investment flow. These pillars represent profiles of real estate investments that may each have specific appeal given your risk tolerance, objectives, and stage of your investing career. In practice, many investors will diversify across all three.
Keep, Earn, and Grow generally reflect the same focus we have always had in sourcing investments: transparency, variety, and the opportunity to participate in discrete, institutional-quality CRE transactions. However, for several timely reasons we are prioritizing thematic funds and curated portfolios, so expect to see those diversified products housed within the Keep, Earn, Grow framework.
Keep
Flexible cash management tools, backed by real estate. This pillar, anchored by our Alpine Note offering, provides a compelling cash management tool and means of tapping into attractive yield over a short hold period.
As of September, 2023, EquityMultiple offers a 3, 6, and 9 month note maturity. Be sure to check the Investments Page for the current annual yields. Each series of Alpine Note can be rolled into the next at maturity for additional compounding. Simply put: Keep offers a compelling alternative to fixed-income, short-term investments.
Earn
Earn investments target attractive cash flow, payment priority, and relatively short terms. In practice, this typically means a real estate investment at a lower position in the capital stack: a senior debt, mezzanine debt, or preferred equity investment.
Target rates of return and hold periods vary depending on broader capital markets dynamics, the business plan, the asset, and overall leverage in the transaction. However, the return profile for Earn investments will typically fall within these bounds:
- Senior debt: an 8-12% annual net rate of return over a nine-24 month term.
- Mezzanine or Subordinate debt: a 10-14% annual net rate of return over a nine-24 month term.
- Preferred equity: a 8-12% current net preferred return and a 10-15% total net preferred return (including accrued interest) over a 1-3 year target hold period.
Distributions from Earn investments will be paid out monthly or quarterly. Generally, investors in Earn products will benefit from payment priority over common equity investors in the transaction.
The Earn pillar may also encompass Funds and Portfolios that pursue a current income objective. It’s in the name: Earn investments provide a channel for compelling cash flow, backed by real assets.
Grow
Grow investments target total return and upside. In practice, most investments within the Grow pillar will be common equity — either into the LP equity portion of the capital stack or, in some cases, as a co-GP. You may also find growth-oriented Funds or Portfolios within the Grow pillar.
Grow investments are the highest potential upside, highest risk investments EquityMultiple offers. They may be most appropriate for investors with more familiarity with real estate; who have already diversified within Keep or Grow; or who generally pursue a more opportunistic investing mindset.
Grow opportunities generally entail more risk and higher potential return than Earn investments. However, more stabilized assets (like core and core plus real estate) can also offer a more defensive investment thesis.
The Bottom Line
Ultimately we hope this three pillars inform your diversification efforts: allocating across Keep, Earn, and Grow potentially offers a means of balancing risk while balancing cash flow and total return potential.
If you have been with us for some time, you will notice that our offerings page, the “storefront” within our investing platform, has been reorganized, with investments grouped under these three pillars. Within the next few months you can expect to see your portfolio dimensionalized by pillar. You can also find information about the aggregate performance of each pillar within our track record, which is updated quarterly and available on demand.
Real estate is a powerful asset class that offers numerous benefits. Not least, the potential to tap into various return profiles across different capital positions. With an innovative team that combines real estate law, capital markets expertise, and asset management, EquityMultiple is uniquely positioned to offer a range of return profiles to fit your portfolio. Keep, Earn, and Grow are the pillars of a diversified wealth-building ecosystem.