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.
All LEX deals follow the same lifecycle:
Sourcing & Evaluation: Our real estate team is constantly talking to property owners and evaluating countless properties to determine whether they’re a fit for LEX investors. Most don’t make the cut, and you’ll never see those deals on LEX.
Coming Soon: Once we’ve identified a property that meets our criteria and we are likely to IPO, we sign an “engagement” with the property owner and display the deal on our site as “coming soon”. During this phase we conduct deeper diligence on the asset and help the issuer prepare their offering documents.
IPO: After the SEC “qualifies” the offering documents, the IPO opens and investors can purchase equity shares in the asset.
Trading: Soon after the IPO closes, the property begins trading without restrictions on the LEX Alternative Trading System (ATS).
Here’s how you can interact with the properties during these phases:
Coming Soon: The way we’ve structured our securities allows us to provide investors with information about the asset before the securities are qualified by the SEC. This means you can do your research well before the IPO opens to determine whether the asset is of interest to you. This process is called “testing the waters.” If you think you might want to purchase shares during the IPO, you can submit a non-binding
Indication of Interest (IOI). An IOI is not a purchase order, and no money can change hands at this stage.
Initial Public Offering: After our securities are qualified by the SEC, the IPO can begin. Shares are offered on a first come, first served basis and the price at the time of IPO is always $250 (we factor in the valuation of the asset by adjusting the number of shares in the offering, not the price per share). The IPO period stays open until all shares have been purchased (which we call being fully subscribed), or 40 days - whichever is shorter.
If you had previously submitted an IOI, you’ll need to return to LEX to complete your purchase once the IPO begins.
Trading: The trading period begins soon after the IPO is complete. When an asset is trading, investors can put in orders to buy more shares, or can sell their existing shares.
Our Alternative Trading System (the “LEX ATS”) is powered by Nasdaq and matches orders in real time between 9:30 AM and 4:00 PM, Monday through Friday. The LEX ATS currently only supports limit orders, meaning you must enter the highest price you’re willing to pay to buy the shares, or the lowest price you’re willing to sell them for.
While the LEX ATS has been specifically designed and built to encourage liquidity, and trading is legally permitted, there is no guarantee that you will be able to find a willing buyer at the time you wish to sell your position.
During the trading period, shareholders may receive quarterly distributions of their proportionate share of the building’s income. Distributions are not guaranteed.
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.
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.
Real estate investment trusts (REITs) have generally been the best available option for individual investors eyeing commercial real estate. Is that changing?