US: Ohio-based real estate investing firm reAlpha has announced that it is raising up to $75 million in a public offering under Regulation A+ of Title IV of the JOBS Act.
Under the terms of the deal, the firm is to sell shares to the public at a price of $10 per share, and investors can invest in the offering.
Earlier this year, ReAlpha announced that it was planning to spend up to $1.5 billion, including debt, to acquire a portfolio of around 5000 short-term rental homes in US cities such as Austin, Dallas and Miami. The firm also closed an additional $6 million investment round in August.
Giri Devanur, founder and CEO of reAlpha, said: “We’re thrilled to offer Main Street investors access to early-stage investment opportunities through our Regulation A+ offering.”
Reg A+ offerings are available to any non-public US or Canadian firms that are neither blank-cheque nor investment companies, and make it easier for companies to access funding by limiting the regulatory requirements to attract Main Street and Wall Street investors. Companies may issue debt and / or equity securities, including convertible debt securities and warrants, as part of their offering, and come in two tiers [securities offerings of up to $20 million or $50 million in a 12-month period].
Similar to IPOs, Reg A+ offerings create publicly traded shares that are available to individual and professional investors. Unlike traditional IPOs, however, Reg A+ offerings are primarily marketed toward retail investors instead of institutional investors, which is attractive for newer startups seeking liquidity and increased brand engagement.
Net proceeds of the offering will now allow the company to build an expanded inventory of homes. A minority interest in these individual properties will then be offered to investors referred to as syndicate members.
The reAlpha business model will help syndicate members simplify and finance property acquisition through syndicate formation. reAlpha will manage the real estate investment to generate income in four ways: equity appreciation, rental income via Airbnb, compounding of investments, and profits from sales.
reAlpha CMO Christie Currie said: “Our mission is to democratise real estate investing and empower everyone to invest into real assets. We are taking this to the next level.
“Instead of just enabling syndicate members to invest in individual properties, our Reg A+ provides the opportunity for our community of both retail and accredited investors to become shareholders before we go into this period of explosive growth,” she added.
Devanur previously led technology services company Ameri100 Inc. to a NASDAQ IPO in under four years.
He said: “Our proprietary algorithms, partnership network, and stellar leadership team provide an opportunity to make reAlpha a powerful force in the short-term rental market. The proceeds of this offering will permit us to scale our operations to create more investment opportunities for those who previously have not had access to the ground floor of early-stage, high-growth companies.”
ReAlpha will use its proprietary algorithm to source properties from the wholesale market, the reAlphaBRAIN, and score each property based on a number of factors. After selecting and approving the properties with the highest scores, the company’s model then allows consumers to benefit from both the superior returns of short-term rental income, as well as the increase in property value through renovations and appreciating markets.
Currie said: “To us, investing in real estate is more than just financial returns. We are seeking to create community, and our Reg A+ is a powerful catalyst to do just that.
“First, we want people to experience the true pride of ownership. So, as an added perk, our Reg A+ investors will get credit to go and stay at reAlpha properties.
“Second, two per cent of every investment will go to our reImagine Fund, which will create up to $30 million in real estate for underrepresented populations as well as enable reAlpha’s workforce opportunity program,” she added.
Rajiv Khanna and Brian North of Buchanan represented reAlpha in the offering.
The deal will be launched on the DealMaker Platform, led by Rebecca Kacaba, Robyn Sklar, and Michael Werry.