Streitwise: The Non-Traded Crowdfunded REIT Explained

The Genesis

Streitwise’s sponsor, Tryperion Partners, has invested in commercial real estate for years through exclusive closed-end partnerships on behalf of high-net-worth and foundation clients. We’ve invested in all major property types across the U.S. (including office, industrial, retail, multifamily and hotel) and were able to add significant value. These “value add” deals presented an attractive risk-adjusted opportunity to achieve 15+% returns – and our investors agreed. So much so that they invested over $100 million into our partnerships, which we’ve turned into a real estate investment portfolio totaling more than $275 million.

But different investors have different risk tolerances. Some are more risk-averse or are financially less able to absorb investment losses, and they should reduce their risk exposure by targeting more moderate returns. Focusing on these investors, we’ve created Streitwise, a non-traded REIT that provides easy access to a diversified portfolio of institutional-quality real estate to everyday investors with a 8-9% annual return target.¹

What is a REIT (Real Estate Investment Trust)?

Simply put, a REIT is a tax-advantaged company that owns income-producing properties and distributes the cash flow to investors in the form of dividends. There are two primary types of REITs: Traded REITs and Non-Traded REITs.

Traded REITs are listed on a major stock exchange (i.e. the NYSE or Nasdaq), thus offering built-in liquidity. But in return for liquidity, Traded REIT shares are typically more expensive and offer a lower dividend yield.

Non-Traded REITs are not listed on a major exchange; instead, they are mostly sold through financial advisors. Non-Traded REITs generally promise a higher dividend yield than Traded REITs offer, but are less liquid.

It makes sense that investors who are less concerned about liquidity would prefer a Non-Traded REIT over a Traded REIT. And as mentioned, Non-Traded REIT shares are sold through financial advisers… But are they working for the investors’ benefit, or their own?

Financial Advisors: The Gate Keepers

Financial advisors provide wealth management services to a wide range of individuals, and work collaboratively to optimize their client’s investment portfolio. Importantly, financial advisor compensation may vary greatly depending on the investments chosen. For example, Non-Traded REIT shares often result in a 7% commission to the financial advisor. 7% Commission! And that commission is deducted dollar-for-dollar from the client’s initial investment. If that sounds unfair, prepare for it to get worse.

Financial Advisors and Non-Traded REITs: The Unholy Alliance

A key question to ask yourself is: Why do financial advisors charge such high commissions for selling Non-Traded REIT shares? The reason: financial advisors require ample enticement to recommend an investment product that itself charges excessive fees. The upfront costs of Non-Traded REIT shares are typically 10-15% of the initial investment.^‡Then there are ongoing costs, such as asset management fees, acquisition fees, disposition fees, financing fees and incentive fees, all of which impact total returns negatively – sometimes severely so. It’s fair to say this model is rife with conflicts of interest between financial advisers, Non-Traded REIT sponsors, and investors.

Enter Streitwise…

Streitwise was designed to combine the benefits – while avoiding the shortcomings – of both Traded and Non-Traded REITs. By structuring Streitwise as a Non-Traded REIT that avoids financial advisors and sells shares directly to investors on our website, we provide direct access to a diversified portfolio of institutional-quality real estate with an ultra-low cost structure. No middlemen. No hidden or excessive fees.

Streitwise vs. The Competition

Let’s suppose Company X is a Non-Traded REIT with 12.5% upfront costs. Assuming the same 3% annual appreciation and 7% annual cash yield over a 5-year investment period, Streitwise earns 42% more profit than Company X does based on upfront costs alone.

Numbers don’t lie, and the difference is clear. Streitwise is the smart way to invest in real estate.

*The figures shown in the table above with respect to Streitwise are not actual returns and are for illustrative purposes only. It is not a representation, warranty, or guarantee of future investment performance. Investors should not assume that we will achieve these returns for our investors or that we will perform comparably to our competitors.

Footnotes

^‡SEC’s Office of Investor Education and Advocacy, Investor Bulletin: Non-traded REITs, August 31, 2015.

Alex Wills

Mr. Wills is the Marketing Director and Head of Product for Streitwise.

Prior to joining Streitwise, Mr. Wills was Head of Paid Media at Bitcoin IRA and Fortress Gold Group. Previously, Mr. Wills was the Director of Lead Generation at GTMA, a real estate marketing agency, where he founded the paid media department that oversaw a large nationwide portfolio of multifamily properties. Mr. Wills holds a Bachelor of Science degree in Marketing from the University of Florida.

SW Manager, LLC (“Manager”) is a wholly-owned subsidiary of and controlled by Tryperion Holdings, LLC (our “Sponsor”). Manager is the external manager and advisor of 1st Streit Office Inc. (“1st Streit Office”) and 1st Streit Office Operating Partnership LP (our “Operating Partnership” and, together with 1st Streit Office, “Our Current Offering”). 1st Streit Office is the sole general partner of our Operating Partnership, through which all of our assets will be owned and substantially all of our operations will be conducted. All references herein to “Streitwise” refer, as applicable, to Manager, 1st Streit Office, the Operating Partnership, or any of their affiliates (collectively, the “Streitwise Entities”). Unless explicitly stated to the contrary, all references to “we,” “us,” and/or “our” shall refer to the Streitwise Entities. By using Streitwise, you accept our Terms of Service and Privacy Policy.

An offering statement regarding this offering has been filed with the SEC. This offering is structured as a non-traded real estate investment trust, or “REIT,” under Regulation A+ of the JOBS Act. The SEC has qualified that offering statement which only means that Streitwise may make sales of the securities described by that offering statement. It does not mean that the SEC has approved, passed upon the merits or passed upon the accuracy or completeness of the information in the offering statement. You should read the Offering Circular before making any investment which is available here: streitwise.com/oc

You may have been referred to Streitwise by a third-party (“Solicitor”). Compensation to any Solicitor may be up to $200 per email registration. A Solicitor may promote and/or may advertise Streitwise’s investment services and may offer independent analysis and reviews of Streitwise’s services. Streitwise and any Solicitor are not under common ownership or otherwise related entities. We cannot ensure the accuracy of the data provided from any Solicitor.

Performance: Past performance is not a guarantee of future results. All historical returns, target returns, or hypothetical projections may not reflect actual future performance.
Risk: This investment involves a certain level of risk and may result in partial or total loss. We cannot guarantee that we will reach our target return for our investors.
Tax: Prospective investors should confer with their tax advisors regarding the tax consequences based on their particular circumstances. Neither Streitwise nor any Solicitor assumes responsibility for the tax consequences for any investor.
Liquidity: Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term should not invest. See Stockholder Redemption Plan in the OC.

¹ Dividends & returns: Current annualized dividend based on the most recent dividend declaration as of the quarter ending 3/31/2024. Dividend return calculations based on NAV at the time of dividend return. 1Q24 dividend payout of $0.11/share equates to a 6.2% dividend based on the current NAV. The REIT has averaged a 7.2% annualized return since 2020 and a 8.3% annualized return since 2017 based on the average NAV for the respective periods. See Quarterly Report for all returns history.
² Source: FTSE NAREIT All Equity REITs vs S&P 500.
³Sponsor Performance: Related to investments by Sponsor, Tryperion Holdings, as part of one of its prior programs, and not of any of the Streitwise Entities. Reflects gross IRR on realized investments in the Sponsor’s investment portfolio since inception. Sponsor performance data as of 4Q23.
⁴Target returns: We will seek to invest in real properties and other real estate-related assets that we believe can produce a strong return through a combination of cash flow and appreciation. We cannot guarantee that we will reach this target return for our investors.

This page may contain forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Offering Circular. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

© 2024 Streitwise. All Rights Reserved. Apple, the Apple logo and iPhone are registered trademarks of Apple Inc. Streitwise is not affiliated with nor related to NAREIT or its annual REITwise conference.