RealtyMogul, the crowdfunded real estate platform with two real estate investment trusts (REITs) open to non-accredited investors, says as of April 21, it has made no changes to the redemption plans for either its dividend-focused MogulREIT I or growth-focused MogulREIT II offerings.
So far it's been a mixed bag for real estate investors in crowdfunded REITs with redemption plans that allow investors to sell some of their stake in what is a relatively illiquid investment. The fallout from COVID-19 has caused several others to pause redemptions, including industry giant Fundrise and Upside Avenue, a REIT focused on apartments.
Streitwise, the company behind the 1st Streit Office REIT, has told investors it intends to continue honoring redemptions, pointing to its steady cash flows from its office properties, which include corporate headquarters for companies including Panera Bread and a strong balance sheet that hasn't relied on debt to fund property investments as heavily as other peers.
Building cash reserves during market uncertainty
The uncertainty surrounding COVID-19 and how it will impact the economy has RealtyMogul's asset managers focused on prudent balance sheet management. In a recent note updating investors in MogulREIT I, the company said "We have maintained a cash position on the balance sheet and will be maintaining higher cash reserves in order to weather any potential effects of a lagging rental market during this pandemic."
With its next-scheduled filing for MogulREIT I coming out on April 30, it's possible that RealtyMogul could announce changes to its plans for redemption requests, or other actions to make sure it is best prepared to ride out what could be months of economic uncertainty.
RealtyMogul's management team has done a great job running both REITs so far, and we expect they will make prudent decisions to keep the REITs financially strong during the coronavirus recession. The bottom line is crowdfunded REITs are not intended to be highly liquid investments, and it's RealtyMogul's duty to maintain a strong balance sheet, even if that results in a future change to its redemption policy.