ATLANTA, Feb. 21, 2018 /PRNewswire/ -- Groundfloor, the first issuer qualified by the U.S. Securities & Exchange Commission to offer real estate based payment dependent notes that are available to non-accredited investors, today announced that it has raised a total of $4.3 million from 687 participating investors in a combination of two recent financings, a private online bridge note closed late last year and an initial closing of its online public offering of equity. In each case, the company kicked off the invitation-only raises to customers and friends of the company with a $1M target, surpassing that in under 48 hours. Due to increased growth opportunities and strong demand, the company has today expanded the equity raise to the public.
Although the macroeconomy is by most measures doing well, over the past few weeks the stock market has experienced volatility and continues to fluctuate. Recently increased expectations that the Fed may raise interest rates in the future has investors rebalancing their portfolios, with a shift out of equity into debt, as bond yields are expected to increase. Twelve-month bond yields have recently inched up to 1.97 percent. While this slight movement has been enough to create massive volatility in the stock market over the past few weeks, to a retail investor, 1.97 percent is still extremely low.
By comparison, Groundfloor investors have earned an average of 13.6 percent per year over the past three years, which represents over 6x the yield of a current one year Treasury note, and over 1,000 percent more than they would have made if their money had been in a CD or savings account over this period.1 Groundfloor's retail investors create their own portfolios of real estate debt investments in the fix and flip residential housing market, and the loans on which the investments are based are secured by a first lien position against the underlying real asset.
"Groundfloor's vision to level the playing field of investing by opening private markets to the public is working," said Brian Dally, co-founder and chief executive officer, Groundfloor. "Thousands of regular Americans have invested tens of millions of dollars in Groundfloor's real estate loans and are making substantial returns. Now, true to our mission of providing access to everyone, we are thrilled to open up investment in Groundfloor itself as we grow the business. After all, why should VCs get all the upside?"
Groundfloor is offering a total of up to 530,000 shares of Common Stock at $10 per share in its online public offering. Investor benefits include: no investor fees for life2; access to regular shareholder-only loan offerings; and invitations to attend annual Groundfloor shareholder events. To date, Groundfloor has raised $7.6M in venture capital from leading fintech VCs and early stage investors that include Fintech Ventures, former WorldPay USA chief executive Anthony Catalfano and Raleigh, NC-based MDO Ventures. The new round of funding, slated to total $7.05 million upon the successful completion of its online public offering, is already enabling the company to scale and continue to grow its sales and lending operations team so it can offer a greater number of loans, serve more customers and supply investors' demands for high return investments.
Groundfloor specializes in lending for single-family or small multi-family home rehab and renovation loans and also provides access to short-term, high-yield returns with a minimum investment of as little as $10 with no fees or middlemen. Typical loans return six to 14 percent annually on a six to 12-month term.3
To date, Groundfloor has originated over 417 loans worth over $54M.4 Demand has been extremely strong and the loans regularly sell out in minutes. The number of investments on the platform grew by 100 percent in 2017, from 25,602 in 2016 to 52,153 in 2017. Also in 2017, Groundfloor announced a partnership with its first institutional investor, Direct Access Capital (DAC), and the company recently earned a historic qualification under Tier II of Regulation A to launch nationwide.
About GROUNDFLOOR GROUNDFLOOR is a unique financial product for individual investors that allows non-accredited and accredited investors alike to participate in real estate investment loans. We open the door to short-term, high-yield returns backed by real estate. Typical loans have returned 12 percent annually on a six- to 12-month term.
Groundfloor was founded in 2013 by Brian Dally and Nick Bhargava. The company is headquartered in Atlanta, Georgia with a fast-growing team on a mission to reformat and open private capital markets for the benefit of individual investors and the investments they fund. For more information, please visit www.groundfloor.com. Follow Groundfloor @groundfloor_us.
Not an offer of securities. Securities may only be offered to residents of states where Groundfloor has given notice of its intent to sell securities under Tier 2 of Regulation A. Please read the Offering Circular, Voting Agreement, and Subscription Agreement, available on Groundfloor's website, for complete details.
1 Groundfloor returns are based on the actual dollar-weighted average annualized returns realized on all loans originated by us that were repaid in calendar years 2015, 2016 and 2017. Comparable yields on the one-year Treasury note and the national average for one-year Certificates of Deposit were sourced on February 19, 2018 from Treasury.gov and Bankrate.com as of that date and December 29, 2014 (2.00% for the current 1-year Treasury note, 0.25% for the 1-year Treasury note three years ago and 0.27% for the average 1-year CD three years ago). 2 Groundfloor has not historically charged any investor fees, but may elect to begin doing so in the near future. Any such fees will be disclosed in the applicable offering circular and will be limited in application only to securities sold after the date such fees are introduced. The fee-free investment benefit will entitle qualifying recipients to receive a monthly credit in the amount of any investor fees levied by Groundfloor. Third-party cost recovery fees (for example, IRA account fees paid to our custodial account provider) and fees charged to borrowers (for example but not limited to origination fees and loan servicing fees) are explicitly excluded. To qualify, invest $2,500 or more in the Groundfloor Online Public Offering. Limited time offer, available while shares are available. Subject to cancellation or withdrawal at any time prior to investment. Please refer to our Offering Circular for more information. 3 For more details on typical investment offerings, consult our current Offering Circular available at https://www.sec.gov/Archives/edgar/data/1588504/000114420418000003/tv482169_partiiandiii.htm 4 Origination figures include loans originated for offerings of Limited Recourse Obligations under Regulation A, loans originated for private securities sales to one or more investors, and loans originated but not sold to any investors.