WE ARE PREIshare

Founded in 2022 by real estate investors and syndicators for investors and syndicators.

Specializing in Real Estate Syndication Services.

Q&A With Michael Anderson of PREIshare, CEO & Co-Founder

Introduction

PREIshare is raising the real estate syndication industry standard by aligning the needs of syndicators and passive investors. We are delivering a marketplace where investors and sponsors can share opportunity and knowledge openly. PREIshare’s industry first Listing Hub provides a secondary market for ongoing fractional real estate investments. Through market intelligence we provide unprecedented
liquidity options. We will be the catalyst for a better experience for all parties, leading to a more fluid and profitable industry. We are committed to this evolution, which will reshape the future of syndicated real estate investing.

What change, or value proposition does PREIshare bring to the commercial real estate syndication industry?

Real Estate investment has many advantages including:

Tax advantaged passive income (in the case of syndicated investments),
It is secured to the ultimate tangible asset, real estate, and
When leveraged, it may produce superior returns and wealth generation.

However, real estate investing has one significant disadvantage. THE LACK OF LIQUIDITY. Many sponsors lock in investments for typically 5 to 10 years, leaving no room for an investor’s changing needs.

PREIshare’s answer establishes the industry’s first secondary market. Most people do not understand that a fractional passive real estate interest is a security, it is not a direct ownership of real property. While it should have the same right of transferability as other securities, it is often restricted from free trading not by law, but by contract. PREIshare will break the siloing of these assets.

Why do you believe the industry will adopt this secondary market for these fractional interests?

Change occurs when the benefits outweigh the need to maintain the status quo. PREIshare creates such compelling benefits for industry stakeholders:

Passive Investors: Through PREIshare’s secondary market, sellers receive liquidity at a market-driven price, and buyer decisions are based on trailing income and market capitalization rates rather than proforma numbers. Increasing investor liquidity demand through this secondary market will persuade sponsor adoption of liquidity language in their offerings.
Syndicators: Based on PREIshare’s studies, sponsors offering the option of liquidity will more than double the number of potential investors. Additionally, by adding a liquidity option for investors, sponsors may reduce the higher returns typically required to attract investors. With more investors and lower return requirements, these sponsors will enjoy a lower cost of equity, making more potential acquisition options viable.
Lenders: Since additional equity is the only solution to fix capital and cash shortages, PREIshare provides preferred equity which delivers:
1. Surety to close
2. Protection for ongoing investments:
  - Create a reserve when a property is temporarily not meeting its debt coverage requirement.
  - Fund capital improvements.
  - Fill in gaps created by changes in underlying debt that deleverages the property.
PREIshare and its Investors: PREIshare becomes the “market maker” that gives its investors three key benefits.
1. Liquidity: A high level of deal flow which will enable ongoing fund liquidity.
2. Higher returns: PREIshare will acquire fractional ownership at a discount and place other forms of equity at a premium rate.
3. Lower Risk: All fractional interest acquisitions will be for properties with a track record rather than proforma.

How will you reduce risk while providing a higher return? Isn’t this generally considered a contradiction?

This is often true when acquiring properties based on proforma returns at an undiscounted rate. PREIshare utilizes four strategies to improve return while lowering risk.

Buying at a discount.
Acquiring properties with a track record.
Purchasing properties mid-term, thus shortening the time exposed to unforeseen market changes. This shorter investment term increases return due to the time-value principle of money.
Diversifying acquisitions by sponsor, real estate class and location.
All preferred equity investments will be high on the capital stack, just behind debt.