As COVID-19 Impacts Real Estate Market, RealtyMogul Lowers NAV on Reg A+ Funds, Decreases Distributions

The COVID-19 pandemic has hammered the real estate market. Landlords are not being paid rent. Hotels are empty and developments have been put on hold. Corresponginly, the Coronavirus has hit real estate crowdfunding marketplaces as the overall economy sinks.

RealtyMogul, one of the best known real estate marketplaces in the US, is probably emblematic of the entire sector. In several filings this week, RealtyMogul noted a drop in NAV of its two Reg A+ funds (MogulREIT I and MogulREIT II).

As of March 31, 2020, NAV per share for MogulREIT I decreased from $9.70 per share to $9.45 per share.

As of March 31, 2020, NAV per share for MogulREIT II decreased from $10.42 per share to $9.77 per share.

The distribution for MogulREIT I was lowered:

“The monthly distribution for April 2020 has been approved at $0.0015491803/ share, representing a 6% annualized return on the $9.45 NAV per share price. This distribution will be paid to investors on/about May 15th. While the current yield represents a decrease from the previous rate of 8% on NAV per share of $9.70, we are pleased that our underlying assets have maintained performance to support such a yield in current market conditions.”

Neither fund is leveraged, something management points to as helping them to weather the Coronavirus storm.

Just about all asset classes, except perhaps gold and Bitcoin, have been hit by the COVID-19 crisis. In some respects, the two MogulREIT funds appear to be doing better.

The moves by the company were foreshadowed earlier this month in a blog post on RealtyMogul that reassured investors:

“It’s also encouraging that management is maintaining its redemption plan. Other crowdfunding platforms and Regulation A offerings have already suspended their redemption plans, so the fact that RealtyMogul is keeping theirs open is a sign of strength in these turbulent times. While that option is still available, investors that have put money into these REITs should remember that there are financial penalties for withdrawing early. Nothing mentioned in today’s filing should give investors too much concern.”

Some industry followers believe that opportunity may emerge for real estate investors once the lockdown ends.


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