SouthPark townhome development using real estate crowdfunding to raise capital

A Charlotte developer is using real estate crowdfunding to raise capital for a new 27-unit townhome development in SouthPark.
Saratoga Asset Management, headed by Ray Wetherington, is planning to build the project on a 2.6-acre site at the southwest corner of Fairview and Closeburn Roads, between Park Road and Park South Drive. Saratoga is under contract to purchase the site, which was rezoned last year, and is teaming with custom homebuilder Simonini Homes on the development, called SouthPark City Homes.

To raise equity capital for the project, Wetherington is working with FullCapitalStack, a Charlotte real estate crowdfunding platform launched in January by QuietStream Financial.

FullCapitalStack lists deals on its site for accredited investors looking for opportunities to invest in commercial real estate. The firm is raising $1.7 million in preferred equity for the SouthPark project, and starting today, accredited investors — individuals with more than $200,000 in annual income or a net worth greater than $1 million — can make investments in the project starting at $25,000.

The firm expects to complete the capital raise within 30 to 45 days, says Chief Investment Officer Nikki Baldonieri. FullCapitalStack is the issuer of the securities and is investing an undisclosed amount in the project. The company will use its own capital to reach the $1.7 million goal if the crowdfunding falls short, but Baldonieri says that’s unlikely.

“I’m confident that we’re going to have a lot of interest and investors in this deal,” she says.

The project is believed to be one of the first developments in Charlotte to source capital through real estate crowdfunding, a space that is growing rapidly.

According to a March report by research firm Massolution, more than $1 billion in investor funds was raised through real estate crowdfunding in 2014, and that number is expected to grow to $2.5 billion in 2015. At the beginning of the year, there were an estimated 85 real estate crowdfunding platforms worldwide, the firm says, with 25 more expected to launch by the end of the year.