Crowdinvesting platform CrowdFundMe and real estate lending crowdfunding platform Trusters, which had recently announced a merger, have launched the first “High Surveillance” crowdfunding operation to protect investors even more.
The purpose of High Surveillance, in fact, designed with attorneys and subject matter experts, is to minimize the risk of insolvency of the proponent (the party that the real estate project on the platform), adding to the control measures already in place, including thorough due diligence and risk ratings.
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How High Surveillance Works
The instrument used is the “Purpose Trust”, a company specifically established by the proponent, who subscribes to a stake ranging from 1 percent to 5 percent.
The Trust, as a minority shareholder and by virtue of a shareholders’ agreement, supervises, without any interference in the company’s activities, the Proponent’s operations, intervening where critical issues that could result in a loss of assets become apparent. Thus, the object of the supervision is the investment project, the transparency of its operations, and its compliance with what was agreed upon in the financing contract signed to operate on the Trusters platform.
The oversight of the Trust, a third party and totally independent of Trusters, the Proponent, and the lenders/investors, generates undoubted advantages for all parties involved: greater clarity on its operations for the Proponent; absence of “surprises” for the investors/project funders, who are constantly updated on the Proponent’s management of financial resources; and successful completion of the financing transaction, with positive impact for the platform as well.
“A highly revolutionary product innovation in response to the need for greater protection of those investing in real estate projects,” said A. Maffi, CEO of Trusters. “Since the start of operations in December 2018, we can consider ourselves very satisfied, Maffi continued: we have financed 226 real estate transactions to date, 100 percent of the projects submitted to the platform, reimbursed 139, recognizing an average annual ROI of 9.5 percent, and the recent merger with CrowdFundMe has accelerated growth.”
The first “High Surveillance” operation
The first “High Surveillance” operation, presented last Oct. 6 at Confcommercio headquarters, concerns a project for the renovation and modernization of a residential building in Milan at 47 Via Civitali, with a minimum raising target of €400,000 and a maximum of €800,000. The promised ROI is 10 percent on an annual basis, and the term of the loan is 15 months.
The granting of the loan to the proposing company, the project presentation says, will be used to finance part of the purchase and part of the renovation costs of an existing residential building consisting of a condominium of 24 units plus common parts and 13 garages. Operational operations will begin immediately after the signing of the final deed (expected by November 2022).
The lot has a total area of about 1,300 square meters, on which a residential condominium building of 1,865 square meters is built for 5 floors above ground plus an attic and a basement.
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First published in Crowdfunding buzz, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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