Summary List Placement
Real estate securities marketplace LEX said on Wednesday that it has raised $6 million in new financing.
A telling detail of the announcement is that one of the most influential leaders at one of the world’s largest commercial real estate landlords, Brookfield’s Ric Clark, has invested in LEX and will be joining the company’s board.
Clark — who is the current chairman of Brookfield Property Group, Brookfield Property Partners and Brookfield Property REIT, former CEO of Brookfield Office Properties, and managing partner of new real estate investment firm WatermanClark — lends more institutional legitimacy to the startup.
Founded in 2017, LEX increases accessibility by offering small investors the change to buy, sell, and trade commercial real estate stakes.
Joining Clark in financial and symbolical support of the marketplace are NFL star DeAndre Hopkins and veteran real-estate attorney Marty Edelman as well as institutional investors like Callahan Family Investments, Kawawa Capital, Inertia Ventures, Modern Venture Partners, Subversive Capital, Two Lanterns Venture Partners, Gaingels, and RAJ Capital, among others.
How real estate securities marketplace LEX works
LEX connects landlords looking to recapitalize commercial properties with a mix of bigger investors and non-accredited retail investors who don’t have the minimum assets typically required to invest in commercial property. (Institutions can also take part as investors.)
“The LEX platform provides a creative solution to some of the industry’s long-standing pain points and empowers institutional and retail investors with new tools to diversify their portfolios while providing property owners with a unique model of accessing liquidity,” Clark said in the press release.
Landlords can use LEX to sell a portion of their equity in an asset. That means landlords, and asset managers like Brookfield, have another source of equity recapitalization without being “overburdened with governance,” said LEX CEO Drew Sterrett. Investors get access to commercial real estate assets that would generally be far out of reach because they’re able to purchase small fractions of the asset.
Sterrett told Business Insider it didn’t take much negotiating to convince Clark to invest.
“Once he understood what we were doing, we weren’t selling him,” Sterrett said. “He saw the market value, and even how Brookfield could use it for their portfolio.”
LEX has seen a major boost during the pandemic
With retail investors playing an outsized role in today’s economy and interest in alternative investments growing, LEX has seen a major boost in business during the pandemic. Sterrett told Business Insider that the company was approached by a SPAC to go public, but the company passed on the offer in favor of raising more funding.
The company, backed by NASDAQ’s trading infrastructure, has also moved into operating other alternative securities marketplaces. Their first major partnership is with real estate crowdfunding company NYCE Companies, but Sterrett said that the company has set its eyes on wide range of other alternative investments.
“We’ve created a SaaS product, what we call ‘securities as a service,’ as a solution to provide liquidity to other alternative asset classes: everything from farmland to income-share agreements, from traditional debt products to sports …read more
Source:: Business Insider