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Feb 21 2021

Real Estate Investment Platform Fundrise Explains how Long-Term Net Return Is Most Appropriate Way to Measure their Performance for Investors

Fundrise, a real estate investment platform using Reg A+ to provide access to “eREITs and eFunds,” notes that it’s hard to imagine a single person or industry who may have been left untouched by the unprecedented events of 2020 (following the COVD-19 outbreak).

Fundrise is “no different,” the company acknowledged. While it has always been one of their “deepest-held” convictions that they need to make preparations for the unpredictable as though it were “inevitable,” the events of the past year were “beyond anything we could have imagined,” Fundrise admitted.

Because of these events, 2020 proved to be the “truest test to date” of the Fundrise platform, the “durability” of the business model they’ve developed, and the overall quality of our preparation, the company noted.

They also mentioned that at the end of the day, net return (over the long term) is “arguably the most appropriate way to measure our performance for investors, and given that last year saw the worst real estate downturn in over a decade, we are once again encouraged by the resilience of the portfolio.”

The company confirmed that the net Fundrise platform return was around +7.42% for the year, in comparison with about +20.95% for the stock market (as measured by the Vanguard Total Stock Market ETF) and -4.72% for publicly-traded REITs (as measured by the Vanguard Real Estate ETF).

The Fundrise team added that although they view these results as “further validation” of their direct-to-investor, “technology-enabled,” long-term approach, a single number “feels lacking in its ability to paint a full picture of all that transpired.” They also noted that as they take this time to reflect and evaluate their work, they’re hoping that by providing transparency into their decisions and actions, their investors stay well-informed and “clear-eyed” regarding what to expect from Fundrise moving forward.

The Fundrise 2019 year-end letter to investors (Jan 16, 2020) had noted that “some may call this approach too conservative, but our belief is that the investors who have achieved consistent success spanning multiple decades tend to spend more time protecting against the downside than they do regretting the upside they may have missed.”

Fundrise confirmed that they began the year in “awe” of a stock market that “seemed further and further disconnected from reality and concerned about what we felt was a general bubble forming across many different asset classes.” That’s why they’ve focused their attention on reminding investors of “what they could expect in the event of a sudden market downturn, as well as building out investment strategies” that they think are sustainable through “substantial near-term headwinds as a result of having strong long-term fundamentals.”

The Fundrise market report, published on February 12, 2021, noted:

“Similar to the stock market, the real estate industry was experiencing a K-shaped recovery where some asset classes, such as suburban apartments and industrial logistics facilities, were actually seeing increased demand due to the impact of the virus, as well as improved financing due to lower overall interest rates. Meanwhile, urban apartments, retail centers, office buildings, and hotels were all struggling to survive dramatic decreases in demand.”

The report continued:

“Unlike the stock market, distressed real estate assets were not ‘repricing’ — in other words they were not available for purchase at 30% less than their previous price. In fact, given that such assets would likely be priced lower by the market, most were not being offered for sale at all. Instead, as is logical, they were being held onto by their owners in a state of limbo as lenders and banks offered temporary forbearance.”

The report added that when faced with “fewer overall opportunities,” and in many instances assets that “arguably had yet to price in the impact of the pandemic on their operations, we chose to remain patient.” Fundrise also mentioned that they “generally held onto cash instead of deploying into overpriced assets,” and when they did actually engage in transactions, they mainly focused their acquisition efforts on those “same strategies” that they felt were well-positioned to “succeed over the long-term, regardless of near-term pricing inefficiency.”

While the 7.42% return recorded last year represents the weighted average performance of around 150,000 unique Fundrise investor accounts (as one figure), it “fails to capture the nuance of both what drove those returns, and how those returns were distributed across our increasingly large and diverse investor base,” the company explained.

They clarified:

“Our managed funds, which together make up the Fundrise portfolio, ended the year with approximately $265 million of cash on hand, which represents approximately 20% of the roughly $1.3 billion of collective equity. And while much of that is to be invested over the coming months (we ended the year with more than $350 million of deals under contract and expected to close during the first half of 2021), holding that amount of cash does serve to lower returns in the short run.”

The Fundrise report added:

“Although not representative or indicative of any actual or potential net performance for our investors, if one were to calculate the same income and appreciation earned from our real estate investments last year against a denominator which approximates historical cash levels, it would yield a hypothetical return much closer to our historical average platform performance.”

Fundrise notes that much of this success may be due to them consistently maintaining a “disciplined value” investment approach, led by their “most active strategy” of investing in affordably priced apartment communities in “growing cities throughout the Sunbelt.”

The Fundrise team concluded:

“In this coming decade, we believe that the application of technology will be transformative to real estate, one of the last old-line sectors still largely undisrupted. As a company built on the synthesis of real estate and technology, we believe we are uniquely positioned to help bring about that change, transforming operating costs, leveraging data more effectively, and challenging status quo practices — all for the benefit of our investors.”

Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: 2020, 2021, acquisition, Banks, bubble, business, Cash, Cities, company, Conservative, coronavirus, covid-19, data, deals, ETF, Event, events, fundrise, hotels, Interest Rates, Investing, investment, Investment Platforms and Marketplaces, Investments, investor, Logistics, market, market performance report, Model, more, other, outbreak, pandemic, portfolio, property investments, Real Estate, Reg A+, report, research, retail, return, returns, stock, stock-market, sustainable, Technology, Transactions, upside, urban, view, work

Dec 14 2020

European Commission Agrees on €7.5 Billion Budget for Digital Europe: Goal is to improve Europe’s Competitiveness in the Global Digital Economy

The European Commission (EC) has come to an agreement on the €7.5 billion budget for the Digital Europe program. The goal is to “improve Europe’s competitiveness in the global digital economy and achieve technological sovereignty.” The EC said it seeks to support the digital transformation that will “guarantee high-quality public services benefiting citizens and businesses.”

The political agreement was reached today (December 14, 2020) with formal approval by the European Parliament and Council anticipated to take place soon with the program starting in January 2021. The budget will span a time period from 2021 to 2o27.

The plan is wide-ranging touching many different sectors of the European economy. A draft “Orientation” for 2021-2022 was previously published outlining potential goals:

  • Making Europe a top supercomputing region globally through the acquisition of at least one exascale supercomputer by the end of 2021, upgrading existing supercomputers and extending the use of advanced computing to industry, including SMEs;
  • Setting up and making accessible Europe-wide data spaces and testing and experimentation facilities for artificial intelligence in the areas of health, environment/climate, mobility, manufacturing and energy;
  • Enhancing cybersecurity by deploying a pan-European quantum communication infrastructure and supporting the set-up of a certification scheme for cybersecurity products;
  • Addressing the shortages of digital experts in the EU through dedicated Master’s programmes for artificial intelligence, advanced computing and cybersecurity;
  • Providing SMEs and public administrations access to the latest digital technologies by setting up a network of Digital Innovation Hubs;
  • Ensuring a successful digital transformation of health and care services with the EU-wide deployment of innovative and cost-effective data-driven tools and services based on technologies like AI and data analytics;
  • Making ICT products and services sustainable, by prioritising their energy efficiency as well as climate neutrality, reparability, lifespan and recycling;
  • Deploying open, interoperable, trustworthy urban digital platforms tailored to communities’ needs, offering easy standardised access to new datasets, and the large scale roll-out of AI- driven services in Smart Energy, Smart Mobility, waste and secondary resource management, industry and (re)manufacturing, healthcare and e-government.

Artificial Intelligence (AI) impacts most sectors of industry including financial services. Other areas of focus overlap with the Fintech realm.

Blockchain is frequently mentioned in the draft. For example:

“Blockchain and distributed ledger technologies (DLT) should be seen as a crosscutting enabling technology that can support the validation of transactions, the development of data spaces and empowerment of citizens, public services and businesses to control and share access to data in a trusted, distributed, secure, transparent and verifiable way.”

The allocation of the budget has been segregated as follows:

  • €2.2 billion – Super computing
  • €2.1 billion – Artificial Intelligence (AI)
  • €1.7 billion – Cybersecurity
  • €580 million – Advanced Digital Skills
  • €1.1 billion – Ensuring wide use of digital tech.

The info sheet may be downloaded or viewed below.


Digital Europe Program factsheet 2020 12 14


Source

Written by bizbuildermike · Categorized: Crowdfunding · Tagged: acquisition, AI, artificial-intelligence, Businesses, Computing, cybersecurity, data, digital, digital europe program, digital transformation, dlt, economy, energy, europan commission, Europe, European Union, financial services, fintech, General News, Global, health, healthcare, Infrastructure, innovation, intelligence, Ledger, other, platforms, Politics, Legal & Regulation, Products, quantum, SMEs, tech, Technology, urban

Oct 29 2020

Chinese city seeks to power urban governance and more using blockchain tech

Authorities in Chengdu, China plan to adopt blockchain for several use cases throughout the city, including urban governance, cross-border trade, smart manufacturing, and agriculture.

During the 2020 Chengdu Global Innovation and Entrepreneurship Fair, the city’s first International Blockchain Industry Expo, Lu Tiecheng, secretary of the Party Group of the Chengdu New Economy Committee, released the “Chengdu Blockchain Application Scenario Supply Action Plan.”

According to a local media outlet, Red Star News, this plan will allow blockchain adoption applications to be submitted by contributors in a variety of fields such as education, healthcare, financial services, and intellectual property. Authorities expect to form around “two to three” blockchain cluster development areas as part of this program over the next two years.

The plan also mentioned blockchain’s usefulness when it comes to legal compliance, stating that officials expect to strengthen data collection and to promote the “unified management, risk prevention, and control” of urban operations.

The secretary of the Party Group of the Chengdu New Economy Committee stated that blockchain could additionally be applied to the medical field. He suggested that distributed technology could be used for electronic medical records, electronic prescription circulation, material verification, vaccine traceability, and medical data sharing purposes.

During an interview with The Paper, Wu Zhongze, China’s former vice-minister for Science and Technology, stated that there was “not much difference between where China and leading economies such as the United States and Europe” stand in terms of developing blockchain-based ecosystems.

Chinese city seeks to power urban governance and more using blockchain tech

Source

Written by bizbuildermike · Categorized: cryptocurrency · Tagged: Adoption, Agriculture, blockchain, china, data, data collection, decentralization, economy, Education, entrepreneurship, financial services, Global, government, healthcare, innovation, Intellectual Property, interview, Media, news, red, risk, science, tech, Technology, trade, United States, urban

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