Office buildings, train stations, multi-family highrises, shopping centers, industrial warehouses - alone, these are little more than steel, concrete, and glass. What makes these structures worth tens or even hundreds of millions of dollars is the value generated by the people who live, work, travel, and conduct business within them.
So why, then, do so few benefit from the enormous value generated by these buildings?
One reason is that large amounts of capital are traditionally required to build or purchase buildings outright. Another is that even if an individual investor did have the economic means to participate in a large commercial transaction, access to most of these deals is concealed behind the closed doors of major institutions and a close-knit community of high-net-worth industry players. There is no centralized market for non-insiders to find single-property real estate investment opportunities and to participate side-by-side with the institutional insiders.
Another barrier is a legal designation called accreditation that allows only certain wealthy individuals to invest in the majority of direct commercial real estate transactions. The accreditation requirement serves an important purpose in preventing less affluent investors from taking losses in private investments that lack the disclosure and registration requirements of public securities. In practice, however, the requirement also serves as a legal barrier that limits individuals seeking to capitalize on the economic benefits of commercial real estate ownership. That is, until now…
LEX will enable investors of all economic and accreditation statuses to invest together in single-property commercial real estate assets; earn passive rental income from the tenants of their portfolio properties; access a liquid secondary marketplace for their units; and benefit from the tax advantages of real estate ownership.
Here’s how it works: owners of stabilized, income-producing buildings submit their properties to LEX for evaluation. After an in-depth due diligence process, if a property meets LEX’s uncompromising standards, LEX assists the owner in creating new publicly-tradable Regulation A securities, each representing a fraction of the equity ownership of the property, and assists in qualifying the offering with the SEC₁.
After SEC qualification (and the issuance of a FINRA “No Objections Letter”), the securities are offered to the general public through LEX’s online platform with initial units starting at $100. Buyers will receive their proportionate (pro-rata) distribution of the rental income generated by the property on a quarterly basis, and they will be free to sell (or buy additional units) on the LEX platform at any time with no minimum hold period₂. Property owners in turn retain their right to manage and sell the whole building to a third party, in which case investors receive their proportionate share of the sale proceeds.
The LEX platform will enable investors to review active offerings, perform property analysis with our proprietary research tools and comprehensive data, and manage their portfolios on our desktop platform, mobile app, or in the future, through your own third-party brokerage firm.
LEX is the next evolution in financial technology-enabled property investing, creating the first truly open and transparent securities marketplace for real estate. Access to our first property offerings in early 2020 will first be made available to those on our waitlist, so sign up today and join us as we enter a new paradigm of real estate investment.
LEX was founded by Drew Sterrett, Dean Sterrett, and Jesse Daugherty and announced $4M of seed funding led by Greycroft and Thor Equities in Fall 2019.
1 LEX works with the issuer’s legal counsel to help ensure the qualification process is as efficient as possible. The SEC does not pass upon the merits of, or give its approval to, any securities offered, or on the terms of the Offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials.
2 LEX Markets is seeking regulatory approval of its platform as an Alternative Trading System, which will enable electronic secondary market trading of securities. In the interim, customers will be able to manually post and/or accept bids and offers on a bulletin board maintained by LEX Markets.
As you think about diversifying your portfolio into Real Estate, or building onto your existing Real Estate holdings, it’s important to understand basic concepts related to Real Estate valuation. This brief overview reviews a few of the fundamental methods used to value a real estate asset.
At LEX, our mission is to empower wealth creation by solving real estate’s access and liquidity problems. Learn how investing in real estate can help you create wealth and generate income.
The Internal Revenue Code contains several provisions allowing owners of real estate to both defer when their taxes are due and to classify a portion of what might otherwise be treated as income as capital gains, which are taxed at a lower rate. These benefits make real estate investing more tax efficient than investing in other income-generating products such as corporate bonds.
LEX offers a new way to invest in individual commercial real estate buildings. While we’ve designed our platform to be simple and intuitive, it’s important that our investors understand how the LEX investment process works, and how deals arrive on LEX. Here’s a brief overview of the lifecycle of a LEX deal, and what the various “stages” of assets shown on the LEX platform mean.
Our mission at LEX is to empower wealth creation by solving real estate’s access and liquidity problems. Real estate deserves liquidity, and all investors deserve access. Solving these two problems in the real estate market will enable a new generation of more widespread wealth creation.
The following feature was originally published on Bisnow.com and written by Julia Troy, in collaboration with the LEX team. We are republishing a version of it on the official LEX Blog with permission below.