🎥 Q&A: NYCE CEO Philip Michael on "The Robinhood of Real Estate"
We followed up with NYCE's CEO to answer our (and readers') questions and concerns
We had the chance to catch-up with Phil last week. For readers who haven’t read our NYCE report, it’s right here.
Before we continue, a big ‘thank you’ to Phil for taking the time to speak with us. He’s a true gentleman!
The Q&A was enlightening, touching on real estate development, transaction scope, and valuation.
Based on the discussion, we re-confirm our buy recommendation of NYCE.
Details and video below.
Real Estate Development
Phil and his team are closely involved in the deal-making and design stage of the process. The real estate projects’ “nuts and bolts” is supported by various external partners, most notably LYND, a Texas-based real estate developer and manager. As part of its JV, NYCE has closed on two deals totaling over $100 million. We’re pleased to see that NYCE is working with experienced developers as this was previously a question mark for us.
Read more about NYCE deals here.
Transaction scope
We were surprised to learn that NYCE’s app and community are not part of the crowdfunding transaction scope.
The deal includes NYCE’s diversified real estate portfolio - the actively managed properties and the real estate development pipeline - but excludes the company’s app and community.
This (obviously) limits some of the upside potential of the investment, though the community’s growth should contribute to the development projects’ success.
Valuation
NYCE’s real estate portfolio includes $260 million of actively managed properties and a $235 million real estate development pipeline.
According to Phil, the loan-to-value of the actively managed properties is “moderate”, which would indicate around (or even slightly below) 70%.
On that basis, we arrive at an equity valuation of $78 million, which would imply that the investment in NYCE on Wefunder at a valuation cap of $50 million, represents a discount to NAV (read if needed: Net Asset Value) of 35%.
This compares favorably with the median discount to NAV of 4% for all publicly traded REITs in the U.S., and 3% for residential REITs, which is most closely comparable to NYCE’s portfolio.
As this analysis excludes the real estate development pipeline of $235 million which holds further potential, we are comfortable to re-confirm our buy recommendation of NYCE.
Q&A Highlights
Real estate development, current trading, and transaction scope.
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Disclosure: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.