On January 16th, 2016, IntelliStay Hospitality Management LLC, launched an investment offering on CrowdStreet.com, a top real estate crowdfunding platform. The offering provided an opportunity for accredited investors to participate in the ownership of a Holiday Inn Express in Boonville, Missouri. IntelliStay acquired this hotel in October 2015 as part of the company’s broader strategy of aggregating limited and select service hotels in secondary and tertiary markets throughout the United States. These assets tend to exhibit lower volatility of cash flow than the higher end of the market and yet IntelliStay is able to acquire them at attractive cash flow yields. IntelliStay believes this represents a pricing inefficiency that presents an attractive investment opportunity.
We have been evaluating incorporating real estate crowdfunding as a potential capital source to help scale this business plan. The “real estate crowdfunding” market is really nothing new to real estate fundraising. It is simply making the extremely inefficient market of small private real estate deal fundraising, typically limited to exclusive “country club” networks, a much more efficient, transparent market.
The passage of the Jumpstart Our Business Startups Act in 2012 essentially changed, overnight, an eight-decade-old law that banned general solicitation of private securities offerings. With this change came demand for better investor management tools. Upon exploring crowdfunding for this opportunity, we immediately realized we were witnessing the application of today’s technologies to an extremely antiquated market due to the modernization of an outdated law. Not only did the pieces of the story fit together, but our experience using the technology to manage investors through our own funding process reinforced this understanding. It is just simply better.
The real estate industry’s aversion to change has made many observers skeptical of the pace at which internet-based platforms have infiltrated the market. Equally challenging, the term “crowdfunding” is used across a multitude of different sectors, each with different meanings and implications depending on the industry. Importantly, in the real estate industry, not only do these platforms ensure that investors are accredited, but the level of transparency forced upon the process by these new tools is a win for everyone involved. Instead of an individual historically having to over extend themselves into a private real estate investment with a likely high investment minimum while potentially feeling pressured through a group of local acquaintances, there is a now a better option. With crowdfunding, that individual may now make the same type of direct investment into a real estate deal with more information and transparency at a more comfortable level and still achieve the portfolio diversification they initially sought.
By January 26th, 2016, just ten days after launching the IntelliStay Boonville offering on CrowdStreet, we were oversubscribed and had begun closing on new investors. On February 12th, 2016, IntelliStay launched our second investment offering on CrowdStreet’s platform. The offering allows accredited investors to participate in the ownership of a Holiday Inn and Suites in Lima, Ohio. To date, we have made significant progress towards the fundraising goal with both new investors as well as many of our current investors in IntelliStay Boonville.
If you are interested in learning more about the currently active IntelliStay Lima offering on CrowdStreet.com, please visit our offering page here: CrowdStreet/IntelliStay-Lima.
Patrick Haynes is Co-Founder & President of IntelliStay Hospitality Management, LLC which is sponsoring crowdfunding offerings allowing investors the opportunity to participate in the direct ownership of individual hotel properties.