Our in-depth review compiles crucial details to help you assess whether Streitwise is legit, ensuring you make informed investment decisions.
What is Streitwise and how does it work?
Streitwise is an investment platform that offers individuals the opportunity to participate in commercial real estate through an equity Real Estate Investment Trust (REIT). The company is sponsored and managed by Tryperion Holdings, a firm known for employing value-add strategies in underpriced U.S. real estate markets. By leveraging Tryperion's expertise in real estate, Streitwise aims to create value for its investors through a mix of aggressive management, leasing strategies, strategic capital improvements, and careful financing.
Investors buy into an online REIT, essentially buying shares in a portfolio of commercial buildings. This portfolio not only includes current properties but also extends to future acquisitions, broadening the investment base as more properties are added. Streitwise focuses on acquiring buildings in non-gateway markets, where properties are often more reasonably priced and come with higher capitalization rates. These markets are typically overlooked by larger investment entities but can provide strong returns. The company employs a conservative approach to financing its acquisitions, using modest leverage to reduce the risk of principal loss.
A significant appeal of investing with Streitwise is the prospect of receiving dividends, which have been consistently distributed for 27 consecutive quarters. Dividends can be received through checks, direct deposit, or reinvestment, based on the investor's preference. This approach to dividends, along with the strategic selection and management of properties, positions Streitwise as an attractive option for individuals looking to diversify their investment portfolio into real estate. The platform's use of Regulation A+ under the JOBS Act to structure its offering as a non-traded REIT further demonstrates its commitment to accessibility and regulatory compliance, making real estate investment feasible for a wider audience.
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How risky is Streitwise?
3/5
— Moderate RiskInvesting in Streitwise, like any investment, carries certain risks that potential investors should consider:
1. Market Risk: The value of real estate can fluctuate due to changes in the broader market or economy. Economic downturns, changes in interest rates, or declines in the real estate market can impact the value of the properties in Streitwise's portfolio and, consequently, the value of the investment.
2. Liquidity Risk: While Streitwise offers a Redemption Plan, it comes with limitations, including a one-year lockout period and quarterly redemption caps. This means investors may not be able to liquidate their investment quickly or at the desired time, especially if many investors seek redemption simultaneously.
3. Discount on Early Redemption: Investors looking to redeem their shares before holding them for five years face a discount on their redemption value, which decreases the shorter the holding period. This could result in receiving less than the initial investment if redeemed too early.
4. Concentration Risk: Streitwise focuses on commercial real estate in non-gateway markets. While this can offer higher capitalization rates, it also means the investment is concentrated in a specific segment of the real estate market, which may have different risks compared to residential real estate or real estate in gateway cities.
5. Management Risk: The performance of Streitwise heavily depends on the management team's ability to identify, acquire, manage, and sell real estate assets profitably. Poor management decisions could negatively impact the REIT's performance.
6. Regulatory Risk: Changes in laws or regulations affecting real estate, REITs, or investments could impact Streitwise's operations and profitability. This includes potential changes in tax laws, zoning laws, or regulations related to securities and investments.
7. Interest Rate Risk: Real estate values and investment returns can be sensitive to changes in interest rates. Rising interest rates can increase financing costs and decrease property values, which could adversely affect Streitwise's performance.
How liquid is Streitwise?
1/5
— Minimum LiquidityStreitwise offers a structured Redemption Plan for investors seeking liquidity, with specific terms and conditions outlined to manage the process of selling shares back to the company. It's important for investors to consider Streitwise investments as long-term, but the platform does provide a mechanism for redemption, subject to limitations.
There's a mandatory one-year lockout period from the date of an initial investment during which shares cannot be redeemed. This lockout period is designed to encourage long-term investment and stability within the REIT.
After this period, shares can be redeemed, but if done before holding them for five years, a discount is applied, reducing the redemption value. This discount decreases over time, incentivizing longer holding periods:
- From 1 to 2 years, shares are redeemed at 90% of the Net Asset Value (NAV).
- From 2 to 3 years, the redemption rate increases to 92.5% of NAV.
- From 3 to 4 years, it's 95% of NAV.
- From 4 to 5 years, it reaches 97.5% of NAV.
- After 5 years, shares can be redeemed at 100% of NAV, eliminating the penalty for early redemption.
In the case of a shareholder’s death or complete disability, shares are redeemed at 100% of NAV, regardless of the investment period.
It's also crucial to note that the REIT faces a quarterly limit on how many shares can be redeemed. If requests exceed this limit, redemptions are processed on a pro-rata basis and may span several quarters, with redemptions issued at the end of each quarter. This structure demonstrates Streitwise’s approach to balancing liquidity needs with the long-term stability of the REIT.
How volatile is Streitwise?
3/5
— Moderate VolatilityThe assets on the Streitwise platform, primarily commercial real estate, generally exhibit lower volatility compared to assets like stocks or cryptocurrencies. This is due to the inherent stability of real estate as an asset class, which doesn't experience the same rapid price swings based on investor sentiment or market speculation.
However, real estate values and by extension, the value of assets on the Streitwise platform, can still be influenced by factors such as changes in the economy, interest rates, real estate market conditions, and occupancy rates.
While these factors can lead to fluctuations in asset values, the changes tend to occur over longer periods, contributing to the overall lower volatility of real estate investments. Nonetheless, investors should be aware that "lower volatility" does not mean "no risk," and the value of real estate investments can decrease as well as increase.
What is the average rate of return for Streitwise?
7.3 %
— Low ReturnSince 2020, Streitwise has offered an average dividend yield of 7.3% annualized, showcasing its potential to provide investors with steady returns through dividends.
However, it's important to note that the actual performance and subsequent dividends are influenced by various factors such as the mix and creditworthiness of tenants, as well as costs related to maintenance, repairs, and property upgrades. These variables mean that future dividends cannot be precisely predicted.
Streitwise aims to maximize dividend yields for investors while maintaining a robust and opportunistic portfolio. Despite this goal, it's crucial for investors to understand that dividend payments are subject to the discretion of the Board of Directors each quarter, and there are no guarantees regarding the timing, occurrence, or amount of future dividends.
What is the minimum investment amount for Streitwise?
$3,515
The minimum investment required to participate in Streitwise's equity REIT is $3,515.
This figure is determined based on the Net Asset Value (NAV) per share, which currently stands at $7.03. The NAV-based pricing reflects the current value of the assets within the REIT's portfolio, ensuring that investors' entry points are aligned with the real-time valuation of the underlying real estate properties.
What is the investment time horizon for Streitwise?
5+ years
Streitwise positions its investments as long-term, suggesting that investors should view their commitment with a time horizon that spans several years. This long-term perspective aligns with the nature of real estate investment, which typically benefits from appreciation over time and the accumulation of rental income.
The company has a one-year lockout period for redemptions, further emphasizing the long-term approach. Additionally, the structure of the redemption program incentivizes holding investments for at least five years to avoid discounts on returns.
Given these factors, Streitwise's ideal investment horizon is geared towards investors who can commit their capital for five years or more to fully realize the potential benefits without facing early redemption penalties.
Who can invest in Streitwise?
International
Streitwise's offering is open to a broad spectrum of investors, including both accredited and non-accredited investors, aligning with the "qualified purchaser" requirements specified in their Offering Circular. This inclusivity means that individuals do not need to meet the high income or net worth criteria typically required for accredited investors, making it accessible to a wider audience.
For non-accredited investors who are natural persons, there is a regulation in place to protect their financial well-being. Such investors are restricted to investing no more than 10% of the greater of their net worth (excluding the value of their primary residence) or their income in each of the two most recent years, and the expected income in the current year.
Furthermore, Streitwise also accommodates international investors, including those who are not U.S. residents or citizens, subject to certain limitations and necessary clearances. International investors with a U.S.-based bank account can invest directly through their bank, while those without a U.S. bank account can proceed with a wire payment. However, it's important to note that the onboarding process, registration, setup of the investor center, and delivery of physical correspondence for foreign investors may experience delays compared to domestic investors.
Is Streitwise regulated or audited?
SEC Regulated
Streitwise operates under Regulation A+ of the JOBS Act, which allows it to offer and sell securities to both accredited and non-accredited investors. This regulation requires Streitwise to file offering statements with the U.S. Securities and Exchange Commission (SEC), which includes financial statements and other significant disclosures. The offerings under Regulation A+ are subject to SEC review and approval, ensuring a level of transparency and investor protection.
Regarding audits, while Streitwise has not explicitly detailed its audit practices on its website, companies operating under Regulation A+ are generally required to provide audited financial statements as part of their annual reports filed with the SEC. These audits are conducted by independent accounting firms to verify the accuracy of the financial statements and compliance with applicable accounting standards, providing an additional layer of credibility and confidence for investors.
Is Streitwise insured?
No
Streitwise has not publicly detailed specific insurance policies covering its investments or operations on its platform.
Generally, real estate investment platforms and their managed properties carry various types of insurance to protect against physical damage to the properties, liability claims, and possibly loss of rental income. These can include property insurance, liability insurance, and business interruption insurance, among others.
Does Streitwise distribute payouts?
Dividends
Streitwise aims to declare and pay dividends to its investors on a quarterly basis, typically around 10 days after the end of each financial quarter.
Investors have the flexibility to receive these dividends in a manner that suits them best; they can opt for a physical check or direct transfer into a specified bank account.
Additionally, there is an option to enroll in a dividend reinvestment program, allowing investors to automatically use their dividends to purchase additional shares in the REIT, potentially increasing their investment over time without requiring additional outlay of funds.
This approach to dividends offers both regular income and the opportunity for compound growth through reinvestment.
How do I get my money back from Streitwise?
An investor can request to get their money back from Streitwise through the company's Redemption Plan, starting after a one-year lockout period from the initial investment date. Redemptions are processed at the end of each quarter and investors can submit their request according to the plan's guidelines.
The amount received depends on the length of the investment period, with early redemptions (before five years) subject to discounts on the Net Asset Value (NAV) per share.
After five years, shares are redeemed at 100% NAV. However, the ability to redeem shares is subject to quarterly limits and if exceeded, redemptions are handled on a pro-rata basis which may extend the process over several quarters.
What are the annual fees for Streitwise?
The company acts as the sponsor of the REIT and charges a 2% annual fee on the investment. This fee is not directly deducted from an investor's principal but is typically taken out of the dividend payments. This means that the dividends reported to investors have already been net of fees, providing clarity on the actual returns.
Streitwise emphasizes transparency in its fee structure, highlighting that it does not impose a variety of common industry fees such as waterfall/profit-sharing fees, acquisition, developer, construction management, servicing, liquidation, property management, financing, disposition fees, or any other hidden fees. This approach contrasts with some non-traded REITs that might include various additional fees, often obscured in the offering documents.
Streitwise's model allows investors to own a percentage interest in the REIT’s portfolio without the burden of excessive or hidden fees, making it a more straightforward and potentially cost-effective investment option.
How do I handle my investments in Streitwise?
Streitwise investors have limited direct asset management responsibilities or capabilities, as the platform and its management team handle the majority of real estate operations, including acquisition, leasing, maintenance, and potential sale of properties. H
owever, investors can manage their investment in several ways:
1. Dividend Reinvestment: Investors can choose to reinvest their dividends to purchase additional shares, potentially increasing their stake in the REIT over time without additional out-of-pocket investment.
2. Redemption Requests: After the one-year lockout period, investors have the option to request the redemption of their shares according to the terms outlined in the Streitwise Redemption Plan, allowing some degree of liquidity management.
3. Portfolio Monitoring: Investors can actively monitor the performance of their investment through regular updates, financial reports, and other communications provided by Streitwise, enabling them to make informed decisions regarding their investment stance.
Overall, while the direct management of the assets is handled by Streitwise, investors can still actively manage their investment through strategic decisions regarding reinvestment, redemption, and ongoing monitoring.
How does Streitwise get taxed?
Streitwise supports investors with tax reporting by providing a Form 1099-DIV by January 31 of the year following each taxable year, as required. This form details the nature of dividends received, which can impact tax obligations.
Dividends may be classified as return of capital (not immediately taxed but reduces tax basis for future gains), capital gain dividends (usually taxed at long-term capital gain rates), or ordinary dividends (typically taxed at ordinary income rates).
How many investors are on Streitwise?
The website received an average of 13,000 visits in the last 3 months.
As of 2023 the total asset value within Streitwise's portfolio stands at $70.3 million, indicating a substantial investment in commercial real estate. This portfolio encompasses a total of 516,749 square feet across all its assets, reflecting the breadth of property managed and offered to investors. An important metric for potential and current investors is the total occupancy rate, which as of the latest report is at 94%. This high occupancy rate not only signifies the demand for the properties within Streitwise's portfolio but also suggests a stable source of rental income, which is crucial for the payment of dividends to investors.
Another key financial metric provided by Streitwise is the Total Secured Note Leverage, which is currently at 42%. This figure represents the ratio of borrowed funds used to finance the portfolio's properties compared to the total value of these assets. A leverage ratio of 42% is seen as a conservative figure in the real estate investment sector, indicating that the company does not overly rely on debt to finance its acquisitions. This conservative approach to leverage is important as it reduces the risk of principal loss, making the investment less risky for individuals.
While the company does not provide specific details on the number of investors within its platform, the financial metrics shared offer insight into the scale and stability of Streitwise's operations. The total asset value, combined with the size of the portfolio, high occupancy rate, and conservative use of leverage, presents a picture of a well-managed real estate investment opportunity that has successfully attracted a significant amount of capital and presumably a wide base of investors interested in accessing the commercial real estate market.
Who is the CEO of Streitwise?
Jeffrey Karsh holds the position of Chief Executive Officer at Streitwise, in addition to being one of the company's co-founders. His role as CEO involves overseeing the strategic direction and operational execution of the company's investment objectives.
Before embarking on the journey with Streitwise, Jeffrey Karsh honed his expertise in real estate investment at Canyon Partners, where he was part of the real estate acquisitions team. This experience provided him with valuable insights into the dynamics of real estate markets and investment strategies, which he has brought to his leadership role at Streitwise.
