A Note from CityVest's CEO Alan Donenfeld
We are excited to announce that CityVest recently completed a $6 million investment into a GP co-investment fund named Catalyst. We believe that this will prove to be one of our top-performing investments to date, and we look forward to continuing to offer investments like this to our growing group of CityVest Access Fund investors.
In total, we have invested almost $40 million in real estate private equity funds. I appreciate our investors’ consideration and trust in our mission: to offer a smarter way to invest in real estate.
I’d like to reflect on how and why CityVest has grown so quickly and become the best real estate investment platform for high net worth investors.
For over 40 years, I have been dedicated to investing – an amount that now exceeds $3 billion. And the fruits of my work and knowledge have benefited my family and friends, whose investment capital I have helped grow significantly. I’ve seen and done a lot – LBOs, PIPEs, SPACs and many other structured vehicles that require careful analysis and due diligence. Around 5 years ago I decided to stop wasting time on asset reallocation and, instead, simply focus on a single asset class with an optimal mix of high returns and lower risk over a long time horizon.
An overwhelming consensus has developed over time that real estate is the one investment that you should overweight in your portfolio for the long term. It is widely known that about 90 percent of the world's millionaires have been created by investing in real estate. A groundbreaking paper published by the San Francisco Federal Reserve revealed that, over the last 100 years, real estate not only provided the best returns of any asset class tracked, but it did so with significantly less volatility. In a recent study by Cliffwater, an institutional investment consulting firm, over the past 20 years, real estate investments achieved a 53% higher return as compared to U.S. stocks. The Tiger21 investor group, for individuals with a minimum net worth of $10 million, have their highest portfolio allocation to real estate at over 20%. Given that the U.S. population is growing by 2.3 million people per year and is targeted to reach 440 million people by 2050, it is easy to understand the steady growing demand pushing real estate valuations higher.
REITs, Real Estate Crowdfunding, Syndications
Overall, institutional real estate private equity funds have outperformed all other methods of investing in real estate, including syndicated real estate deals, crowdfunding and REITs. It is undisputed that large real estate funds with capital in hand have the best investment management and, in addition, they have the best deal sourcing capabilities. This enables these funds to identify and execute opportunistic acquisitions with speed and with the most attractive pricing. Syndicated deals, crowdfunded deals, small deal sponsors and REITs just cannot compete with institutional investment funds.
My Personal Real Estate Investments
My own journey investing in real estate started with a single condo purchase in the 1980s. Then a couple of 4 plexs. What a pain in the neck. That was not passive real estate investing – mortgages, renovations and tenants. Syndications and crowdfunding investments performed poorly due to small deals and high fees. Then, I discovered real estate private equity funds.
My first real estate private equity fund investment was made around 5 years ago when I invested in an institutional fund that had a great historical audited track record, an administrator, and professional investment management. Given that the fund targeted institutional investors, the minimum investment required was prohibitively high. This was not surprising since top performing institutional funds attract so much capital. These funds can easily require a minimum investment amount per investor of $250,000 or $500,000.
Unfortunately, the high minimum investment required by institutional funds was far more than I wanted to invest. So, my brother and friends aggregated their capital with some of mine in a feeder fund that I formed in order to meet the large minimum investment requirement. We pooled our capital, like a co-op, and formed our first Access Fund.
Build Something That I Wished Others Had Built for Me
I took the feeder fund / co-op investment idea and wanted to make it even better, knowing that I wanted to build something that I wished others had built for me. The goal remained: obtain higher returns with lower risk. Obviously, I wanted to invest alongside smart institutional investors and to avoid being a part of a little retail crowdfunded syndication of an individual property. I wanted to make sure that there was an audit and an administrator. And that the investments in which I participated were managed and supervised from start to finish by professional real estate investors.
If You Build It They Will Come
So, I created CityVest’s Access Fund as a way to pool capital together to access institutional private equity funds. The demand for our Access Funds grew rapidly and innovations followed. We created CityVest as an online investment platform with state-of-the-art technology to provide a secure and easy method of investing in real estate. Our award-winning Investment Dashboard leads the online investing world in providing investors information about their investments.
Good, Better, Best
As our Access Fund investment amounts grew to $5 million per offering, we were able to negotiate better investment terms, such as a 12% preferred return. As our total investments approach $40 million, we are not only demanding better investment terms, but some of the very best investment funds are coming to us. Ever mindful of our goal of higher returns with lower risk, we have steadily improved our ability to find the best real estate private equity funds.
Trust But Verify
To maintain our high standards and reduce risk, CityVest now requires a Verified Due Diligence Report on all of our private equity funds from a highly acclaimed independent due diligence firm named Buttonwood Investment Services. The Buttonwood Report confirms everything from investment manager background checks and scrutiny of their track record to confirming fund governance and manager skin-in-the-game. CityVest is unique in providing this third-party Due Diligence Report on its investment funds, and we make it available on our website. Because CityVest’s investment funds are well-vetted and pass due diligence requirements, we believe that our funds have less risk for our investors than most other real estate funds.
CityVest is a STAR
CityVest screens and vets best-in-class real estate funds, negotiates better investment returns and provides access to those funds. The result is the CityVest STAR:
- Safety resulting from methodical screening and use of an independent third-party Due Diligence Report on each investment fund,
- Trust emanating from requiring oversight by auditors and administrators,
- Access to the best institutional real estate funds which require high minimum investment amounts, and
- Returns that are higher due to negotiated better terms given the Access Fund’s large investment amount.
I have been keeping two lists:
- Customer testimonials to stay motivated
- Customer complaints to stay humble
“I wish I had found CityVest when I started investing years ago.”
“Thank you for the level of screening and due diligence that you do.”
“I invested in the same fund through another platform with worse terms; I’m sticking with CityVest for now on for all of my investments.”
“Please get my distributions to me on a timelier basis.”
“Can you communicate the status of my investment on a more regular basis?”
“Where is my K-1?”
While CityVest is admittedly a small company, our goal is to be the best at what we do. To that end, I have just hired Steve Katchur as Chief Financial Officer of CityVest to oversee all accounting, including distributions. Steve’s mission is to improve our systems and make distributions on a timely basis. Prior to joining CityVest, Steve was Chief Financial Officer and Chief Operating Officer for Land & Buildings Investment Management for 5 years. Land & Buildings is a registered investment manager with over $600 million in assets under management (AUM), which specializes in publicly traded real estate and real estate-related securities. Prior to Land & Buildings, Steve was Chief Financial Officer of several Tiger Management funds with over $30 billion in AUM. Early in his career, he worked at State Street, Citco Fund Services and Bank of New York Mellon.
I appreciate the trust that you have put in me as the steward of your investment capital. I will continue to champion CityVest’s mission: to be a Better Way to Invest and Build Wealth.
If you have any questions do not hesitate to contact me directly at 917-747-3091 or schedule a direct call through my calendar link.
As always, thank you for the opportunity to provide unique and successful investment services to you.
Founder and CEO
p: 212.593.1600 c: 917.747.3091
a: 110 East 59th Street 22nd floor New York, NY 10022
w: www.CityVest.com e: firstname.lastname@example.org