- CrowdStreet, a real estate crowdfunding company, has brought former BlackRock real estate head Jack Chandler onto the company's advisory board and investment committee.
- Chandler was the global head of real estate of BlackRock for seven years, and spent 25 years at LaSalle Investment Management, including a stint as global CIO.
- Business Insider spoke to Chandler about investing during a pandemic, and the differences between investing during a financial crisis versus investing as real estate is fundamentally shifting.
- Visit Business Insider's homepage for more stories.
A former BlackRock exec is joining the advisory board and investment committee of CrowdStreet, a commercial real estate crowdfunding platform, where his counsel could help smaller, accredited investors to get their hands on potential coronavirus real estate gains.
Jack Chandler will bring more than 30 years of experience in the commercial real estate world to CrowdStreet.
Chandler is a big get for CrowdStreet, which claims to have raised $1.3 billion for more than 460 projects, and for the real estate crowdfunding model as a whole. Chandler spent seven years as managing director and global head and chairman of real estate at BlackRock, the world's largest asset manager, and 25 years before that in multiple roles, including CIO, for LaSalle Investment Management, a subsidiary of JLL.
He launched private investment company Majesteka Investments Holdings in 2017 after leaving BlackRock.
CrowdStreet, launched in 2014, offers accredited investors the ability to invest both into private individual real estate deals and into the firm's own funds, like its recently closed opportunity zone fund. Before crowdfunding, most non-institutional investors could only invest in real estate by putting their money into public REITs or through personal relationships and connections with developers.
Chandler told Business Insider that as an investment manager, he had long watched the "rise of private investors and the mass size of investor pools," and was interested in the "democratization" that crowdfunding could allow for.
He first met CrowdStreet founder Tore Steen a few years ago through an Urban Land Institute meeting, and eventually, their conversations led Steen to ask Chandler to join the company's board.
We spoke to Chandler about his new role with CrowdStreet, the promise of crowdfunding, and the challenges of investing in the COVID-era.
Investing in the time of COVID
The coronavirus fall out is rewriting the book for commercial real estate assets, which depending on asset class and location are seeing anywhere from 20% appreciation to 60% depreciation in the past six months. This is massive in a sector that usually forecasts single-digit appreciations per year. A very nontraditional year has changed the game for commercial real estate investments.
You can have a hypothesis and can make an investment, but you're not underwriting a traditional real estate cycle, you're underwriting a fundamental change," Chandler said.
These fundamental changes are very different from the financial conditions that led to the great financial crisis, where the collapse of liquidity was directly at cause for dislocation.
"At the end, was there a fundamental difference in how real estate was used in 2011 versus 2007? Not really," Chandler said.
Now, Chandler said, investors have a range of questions to think through: whether Zoom will change air travel, whether office buildings will decentralize, and "have the buildings of last-mile distribution caused the death knell of retail?"
With most sectors of real estate seeing some level of dislocation, Chandler said private capital has an advantage investing, because of the speed at which it can deploy capital compared to public investors.
Right now, transactions are still slowed, but Chandler attributes that more to a sense of stasis about what the future will look like, which can be seen in the bid-ask spreads between owners and potential purchasers, than financial tightness and lack of liquidity.
The promise of crowdfunding
Chandler sees crowdfunding, which is still in its early days, as something that can be mutually beneficial for traditional developers and single private investors. Investors get the benefit of a larger set of options for where to invest their money, while developers and their general partners can bring more money in from more sources, and potentially create long-lasting relationships with investors.
While previously most individuals would usually only be able to invest into private deals through aggregated funds, like a pension fund, crowdfunding allows them to directly invest. CrowdStreet offers one fund to all investors, with the rest open to accredited investors. The definition of accredited investors was expanded by the SEC this year, opening up some private investments to a larger swath of investors.
Chandler said that while this is a fundamental change in the source of money, it doesn't actually change how they think about evaluating investments.
Chandler will help the company evaluate both individual deals on the platform and the deals that make up their larger funds, doing due diligence on deals and explaining the underlying investment assumptions that come with investing in a particular asset price and a particular location. This isn't too dissimilar to the works he's done for 30 years, but the difference is that this due diligence and analysis is for the benefit of individuals, instead of large pools of money.
"For an accredited investor, wouldn't it be great if you got the same kind of vetting and analytics as if you were CALPERS or some large pensions fund," Chandler said.
The responsibility for evaluating the investment still lays on the actual investors, especially in a marketplace like CrowdStreet, but by providing more context for each deal, Chandler said that investors can match their own views on the future of the economy with investments that fit those goals.