PeerStreet has always believed the more transparent, educational, and honest we are as a company, the better off all stakeholders in our marketplace will be. To that effect, PeerStreet continually strives to provide investors with more historical and current data of its loan performance.
Now more than ever, it is important to analyze trends and metrics to understand how macroeconomic factors can affect your portfolio’s health. By surfacing granular data, our hope is investors can make more confident, data-driven investment decisions. Continued transparency is a mantra we are taking forward.
This report outlines the loan performance PeerStreet has seen historically and how that performance has been impacted by COVID-19. It is worth noting that, due to the pandemic, certain qualifying borrowers were granted mortgage payment deferrals. Deferred loans are categorized as paid current in the data sets below.
L-30, L-60, L-90, L-120: Late 30, Late 60, Late 90, Late 120+ this means that a loan has not paid a payment in 30+ days.
Delinquent: PeerStreet classifies a loan as ‘delinquent’ when it is 60 or more days late (Late 60+).
Foreclosure: The action of enforcing the lender’s rights under the loan documents, and potentially taking possession of the underlying property, when the borrower fails to keep up their payments. Once the foreclosure process starts, the most common outcomes are either: (i) the loan is reinstated or pays off before the property is foreclosed on or (ii) PeerStreet takes ownership of the property at auction resulting in an "REO". Properties taken over as REO are typically then marketed to be sold.
Default: A loan is labelled as being in “Default” when PeerStreet commences the foreclosure process. Foreclosure timelines vary from state to state.
REO: “Real Estate Owned,” we have taken ownership of the property, usually as a result of the foreclosure process, but we have not yet sold it.
REO Sale: Sold the property.
Building on our success in transforming access to real estate debt, we’re launching a Credit Opportunity Fund to match investor demand with current market opportunities.
This new fund strategy, which was covered by Crowdfunding Insider, expands the ways investors on our platform can access real estate investments, providing them with more options in diversifying and customizing their real estate debt portfolios. The Peer Street Credit Opportunity, LP (the “Credit Opportunity Fund”) will allow investors to take advantage of changing market conditions and gain exposure to opportunities that weren't previously available on PeerStreet, such as distressed debt, warehouse financing and subordinate investments.
“This was the next logical step in the evolution of our marketplace and provides more options for different investment preferences,” said Brew Johnson, cofounder and CEO of PeerStreet. “Just like investors on Robinhood or TD Ameritrade can choose whether to buy individual stocks, or invest in ETFs and mutual funds, we are providing similar options to our real estate investors.”
We have been pioneers in fractional investing in real estate loans through our marketplace, making the process of buying into real estate loans similar to buying stocks. To date, we have focused on providing the tools and resources our investors need to select, buy, and build their own real estate debt portfolios - though we have frequently received requests for fund options from investors. The launch of this new fund strategy furthers our mission to continuously unlock value for investors, and create strategies that fit our investor needs.
Our investors are already, in essence, creating their own curated funds either manually or through our automated investing features. But this provides an easy way to deploy larger amounts of capital at once into different strategies. This strategy allows us to match investors to shifting opportunities that are made available through our nationwide network of lenders.
To learn more, reach out or read more about the fund here.
Peer Street Credit Opportunity, LP is available only to accredited investors and qualified clients. Nothing in this release constitutes investment advice. Investors should consult with their financial, tax, and legal advisors before making any investment decisions and to determine whether this fund is suitable to their financial position and investment preference.
Any information regarding Peer Street Credit Opportunity, LP is provided for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service by PeerStreet or any other third party. Relevant details regarding investment opportunities are contained within the corresponding private placement memoranda for Peer Street Credit Opportunity, LP. Nothing in this release is intended to provide tax, legal, or investment advice and nothing should be construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction. PeerStreet does not represent that the securities, products, or services discussed in this article are suitable for any particular investor.
Today PeerStreet was able to inform our nationwide network of private lenders that we will resume buying residential bridge loans again. We believe this is an important step toward reinvigorating the real estate lending markets that recently froze up due to economic volatility and uncertainty created by COVID-19. Infusing capital in these markets is a crucial step in restarting our economy and helping lenders, borrowers, real estate entrepreneurs and their supporting businesses get back to work throughout the country.
In late March, PeerStreet was one of the first in the industry to pause loan buying. This decision was made in response to COVID-19 issues, such as the closure of county recording offices, health hazards to notaries and local appraisers, and a freeze in the credit markets.
We also made this difficult decision to temporarily pause loan buying until we could better protect PeerStreet’s investors and other market participants, and assess new market supply and demand dynamics. Our goal was to take a step back, review the situation, and restart as soon as possible - which is exactly what happened today. We’re very excited to begin purchasing loans again, not just for PeerStreet as a company but for our entire ecosystem.
We’ve spent the past several weeks speaking with lenders, investors, borrowers and our own family of employees, and we will continue to do so to further understand the evolving situation and how PeerStreet can do our part. Our marketplace participants remain our priority, and we’ll be focused on ensuring that our platform continues to facilitate the flow of capital in real estate.
Thank you for your continued support.
Last year, we posted an extensive update on the performance of the PeerStreet marketplace and we believe it’s important to revisit this and update our customers on the health and status of PeerStreet investment opportunities to date.
As of February 29, 2020, a total of 8,818 loans have been funded through the PS marketplace and 4,924 have been paid off. Of the remaining 3,894 loans (which we define as “active” loans), 92.55% were either current or less than 90 days late, 6.78% were 90 or more days late, and 0.67% were real estate-owned (“REO”), meaning we had foreclosed on the property but had not yet sold it.
Avoiding late payments, defaults, foreclosures, and REOs is our objective, but these are to be expected in any mortgage loan portfolio. While the idea of a default or foreclosure can strike fear into the hearts of investors, it also highlights one of the primary distinguishing qualities of real estate debt investments: there’s a physical property that acts as collateral for each loan investment.
Due to the collateral securing the loans, late payments or defaults do not mean that those loans will not be paid back. For instance, of the 4,924 loans that had paid off as of February 29, 2020, 2.90% (or 143) had gone into default—meaning a borrower had stopped making payments and PeerStreet had initiated the legal process to take back the property on behalf of investors, by filing a notice of default or foreclosure complaint. However, of those defaulted loans, 94.40% (or 135 loans) were resolved without any principal loss to investors.
This collateralization is an especially relevant attribute today, where we are observing a growing sense of investor uneasiness. When borrowers are late or even default on their mortgage loans, lenders can move to sell the underlying property in an effort to recoup capital.
We are planning on building platform updates that will enable us to provide more real-time performance metrics automatically, but until then, we want to walk investors through where our marketplace is currently.
Portfolio Performance - Defaulted Loans
Investors commonly ask about the outcome of loans that go into default. While each loan is different and we can’t predict future outcomes or resolutions, paid-off loans provide a glimpse into how past defaulted loans were resolved. The below graph reflects how paid off loans on PeerStreet’s marketplace were resolved as of February 29, 2020:
Active Portfolio Delinquencies Breakdown
Shifting gears away from paid-off loans, the graph below shows the payment status of currently active loans by separating them into three buckets: (i) loans that are either current or less than 90 days late, (ii) loans that are 90 or more days late, and (iii) loans that completed foreclosure and have become REO.
No lending institution or marketplace is immune to external market forces and events, which is why PeerStreet collects data to better understand drivers of market performance and continually monitors our investors’ active loan portfolio. Our in-house Underwriting, Servicing, and Asset Management teams work hard so you don’t have to bother with identifying loans that match investor demand or collecting, processing, and distributing payments.
If/when a loan does go into default, our Asset Management team pursues both legal remedies (namely, foreclosure) and other out-of-court avenues (such as workouts or note sales) in an effort to get investors paid back. This commitment to investor success remains consistent, even as we continue to adjust our loan submission criteria in an effort to keep our marketplace healthy and active.
Even in a healthy housing market, it is the very nature of investing that not every opportunity—on the PeerStreet marketplace or elsewhere—will perform. PeerStreet’s objective is to build a marketplace that makes it easy to diversify your portfolio so that the risk of any one loan or group of loans not performing does not result in outsized risk to your performance.
We believe a well-diversified pool of loan investments found on PeerStreet will provide value to investors in any market cycle. However, it would be foolish to pretend that the world is the same as it was last month or last year. We are simultaneously dealing with a pandemic/health crisis and a potential financial crisis. One of these issues alone would create challenges, but dealing with both at the same time creates an added level of complexity. To make matters worse, it is very difficult to gauge what effect COVID-19 will have on the overall economy over the medium term.
All of these cross-currents are creating extreme volatility and uncertainty across asset classes. While it is impossible to predict what will happen in the market, our commitment to you is that we will continue to work hard to create value, to launch features and offer products that make it easy to diversify your portfolio, and to provide you different options for your capital beyond traditional asset classes, like stocks.
We are grateful for your continued participation and support, and will continue to be transparent in our communications with you.
PeerStreet made Forbes’ inaugural list of America’s Best Startup Employers for 2020, which recognized 500 startup companies across the country. To be selected, PeerStreet was evaluated across three main categories: employer reputation, employee satisfaction, and company growth.
“It is a huge honor to be recognized in Forbes’ first list of this kind. We have incredible talent here at PeerStreet and our goal has always been to provide the best working environment we can for our employees,” said PeerStreet co-founder and COO Brett Crosby. “We expect a lot out of them and our talented team members have allowed us to achieve the success we have today. We look forward to continuing our journey together.”
This award is presented by Forbes and Statista Inc., a world-leading statistics portal and industry ranking provider. Forbes and Statista analyzed more than 7 million data points to identify the top startup employers out of thousands of qualified organizations to select those recognized this year.
We’re excited to continue to be recognized for our company culture and strength as a business, including being named among the Best Places to Work in Los Angeles in 2019 by Comparably and among American Banker’s Best Fintechs to Work For in 2020.
It’s no secret that we take company culture seriously at PeerStreet, but it isn’t every day we get a four-page spread highlighting our efforts to create an inclusive, diverse, productive, and happy culture. Yet that’s exactly what happened in Geraci’s March 2020 issue with its “Inspiring Excellence Through Shared Purpose" article.
Take a look at what we’re doing, and what some of our employees have to say!
PeerStreet is excited to announce that we’ve promoted Ellen Coleman to Chief Financial Officer. Ellen joined the company a year ago as EVP of Finance. As CFO, she’ll oversee a variety of different teams, including finance, accounting, treasury, servicing, and capital markets, and will focus on bringing more automation to various financial systems for PeerStreet and our users.
Ellen brings more than 15 years of experience in corporate treasury within the mortgage industry, and made an immediate and important impact upon joining PeerStreet. Before Ellen started, much of our tech investments were customer-focused, building intuitive and comprehensive platforms and new products. Ellen’s hire helped bring a renewed focus on internal technology innovation, transforming many of PeerStreet’s more manual financial operations processes into automated ones for greater efficiency and accuracy.
This work has included launching APIs for our purchasing and wire processes, saving time for PeerStreet and our clients alike. She spearheaded automating settlement statements to further improve loan purchasing across the board. She also played an instrumental role in securing $60 million in Series C funding and $4.25 billion in capital commitments in the latter half of 2019.
“It’s hard to overstate the impact Ellen has had in a relatively short time here. She quickly became a respected leader throughout the company and we are lucky to have her leading our finance efforts,” said Brew Johnson, co-founder and CEO of PeerStreet. “We’re looking to build upon the momentum she’s already brought to our financial operations, bringing more automation and innovation to every touchpoint of our business.”
Ellen came to PeerStreet with a strong track record in both treasury operations and debt capital raising, demonstrating proven success with building finance and treasury teams, cash management and wire operations, and establishing new processes to support business objectives, particularly for enabling growth. Her experience will continue to be invaluable for PeerStreet as we scale and expand both the overall platform as well as our finance and credit operations.
“It’s been an incredibly rewarding year at PeerStreet, from marquee achievements like our Series C raise to the less sexy, behind-the-scenes improvements to financial systems, modeling, and reporting,” Ellen said. “I continue to be inspired by the teams and individuals I get to work with on a daily basis, and am so excited to see what new heights we can reach together in 2020.”
Prior to joining PeerStreet in 2019, Ellen held positions as Managing Director at Countrywide Financial Corp, Treasurer at Stearns Lending, and Executive Vice President and Treasurer at both Nationstar Mortgage and Homeward Residential, Inc.
PeerStreet’s growth recently earned the company a place within the top 25 in Deloitte’s 2019 Technology Fast 500 Ranking of fastest-growing technology companies. With recent recognition for both its award-winning culture and technological innovation, PeerStreet has continually adapted as it has grown to capitalize on a clear need in the mortgage finance space for easy, transparent real estate debt investing.
We’re proud to have been named among the top 25 fastest-growing technology companies in Deloitte’s Fast 500 list. For the past 25 years, this list has brought attention to North American companies that deliver technological innovation, entrepreneurship, and rapid growth across a variety of industries.
The ranking is based on fiscal-year revenue growth over the previous three years; PeerStreet’s 4,586% growth was enough to land us at #23.
This announcement marks another example of our incredible growth trajectory this year, highlighted by the $60 million in Series C funding we recently raised.
We congratulate the other firms on the list, and want to thank you all for your support. We have even bigger plans for 2020, so stay tuned!
As reported this morning by Forbes, we’re pleased to announce the completion of a $60 million Series C funding round. Colchis Capital led the round with a consortium of institutional investors. Existing investors Andreessen Horowitz, World Innovation Lab, and Thomvest Ventures also participated.
This raise will help us continue to hire top talent and further scale our two-sided marketplace—the first and largest of its kind for investing in real estate debt.
“We’ve been a strategic partner of PeerStreet for years as an investor in the company and in loans on the marketplace. Leading this round was a natural next step for us,” said Ted Conrads, co-founder and president at Colchis Capital. “We’re excited to be a part of their growth as they continue to innovate as the market leader.”
In addition to the $60 million in funding, we also secured $4.25 billion in new capital commitments from institutions to purchase loans through our proprietary platform. These commitments will help bolster our existing suite of short-term bridge loan products and grow our recently launched 30-year buy to rent loan program.
When speaking about the raise, Brew Johnson, our co-founder and CEO, was proud of the success but remained focused on our vision as a company. “2019 has been an incredible year of growth for PeerStreet, and this funding round will accelerate that growth,” he said. “The injection of equity capital into our business via the Series C, combined with strong demand from loan buyers, means we will continue to provide value for lenders, end borrowers, and investors for years to come.”
Each investment opportunity we offer is reviewed both algorithmically by the PeerStreet platform, as well as manually by our experienced in-house real estate and legal teams. We then aggregate those loans for institutional and accredited retail investors, who in turn provide PeerStreet-approved lenders with capital. Those lenders then make loans to end borrowers who buy properties, improve them, then either sell them to homebuyers or rent them out to tenants.
Reflecting on how PeerStreet’s efforts align to today’s market, COO and co-founder Brett Crosby said, “I think our society is at a crossroads—there is a shortage of housing in many areas of the country and nearly 40 percent of existing homes were built before 1970. We can either build more homes and continue to take over green spaces, or we can up-cycle the existing aging and dilapidated housing stock. PeerStreet’s business model ultimately supports real estate entrepreneurs doing the latter, curing the capital constraints that have held them back and allowing them to reinvest in American communities.”
We are pleased to announce that we won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs) for the Information & Intelligence – Crowdfunding category.
For the past six years, CRETech’s RETAS recognizes the year’s most innovative and cutting-edge companies that have played an integral role in advancing tech in the real estate industry. Winners are selected by an elite panel of judges, including the leading venture capitalists, angel investors, corporate investors, and thought leaders in the real estate tech industry.
As our COO, Brett Crosby said, “PeerStreet’s vision is to align the interests of everyone in this ecosystem—from lenders and investors to borrowers and the communities they represent—by providing both easier access to real estate debt and empowering participants to make better decisions. Winning a RETAS is further validation to our entire team that the work we’re doing is transforming this industry for the better.”
This win comes at an exciting time for us, as we recently expanded our product offerings into long-term real estate debt through a new Residential for Rent program and incorporated more loan types into our Automated Investing feature, which now boasts a low $100 minimum for small-balance reinvestments. As of March 2019, we have over $2 billion transacted on the platform and more than $1 billion in assets under management to date.
RETAS is presented by CREtech, the largest event, data and content platform in the commercial real estate tech industry. For more information about the Real Estate Tech Awards, click here. Also, we’re hiring if you’re interested in joining our growing team.
Is it time to update the definition of an accredited investor? We think so. Our goal is to make real estate debt investing available to as many people as possible. Read our CEO’s Forbes article where Brew Johnson offers ideas on why and how to democratize investing.
As Brew notes in the article, “My argument is still this: Wealth does not equal investor sophistication, and wealth should certainly not equal more opportunity. Today’s laws do not appropriately address either issue.”
“By being able to easily access data and information that in previous decades was generally only accessible to the most sophisticated (and wealthy) investors, today’s average investor is excluded from many more products that are made easy to understand and to invest in through technology, with a similar (if not greater) level of safety as opportunities non-accredited individuals can invest in.”We think the topic deserves more conversation and we’re glad to see Crowdfund Insider and others pick up on this thread. Surely, there will be much more debate on this topic and we hope to further fulfill our mission of democratizing real estate debt investments and truly level the playing field between Wall Street and Main Street.
We are happy to announce that investors who use Mint to manage their investment portfolios and performance can now view their PeerStreet positions on Mint’s platform. This has been requested by many of our investors for some time. Mint wanted to hear the demand directly from our customers, and thanks to you, they prioritized the integration with PeerStreet.
This integration with Mint is one of our most requested third-party integrations and follows similar PeerStreet integrations with other personal finance platforms, including Wealthfront, Betterment, and Personal Capital. These integrations provide additional insight and transparency to help customers understand their PeerStreet investments in the context of their overall portfolio and guide future strategic investment plans. Access to investments in real estate debt has improved over the years, so this is a natural integration for PeerStreet, Mint, and our common customers.
To add your PeerStreet account to Mint:
This is another exciting step forward in the growth and popularization of the PeerStreet marketplace. We announced earlier this year some key changes to the platform, namely reducing the reinvestment minimum and adding new options to Automated Investing. Both of those updates were supported by feedback from our customers and we are always glad to hear requests from our investors via [email protected].
We hope you enjoy this new integration and thank you for helping make this possible.
Our co-founder and COO, Brett Crosby, recently wrote an article for Entrepreneur.com that discusses the power and perils of two sided marketplaces, and offered his thoughts on how to best build one from his years of experience at PeerStreet. He reflects on some of the specific opportunities and challenges he has learned at PeerStreet and provides examples of other two-sided marketplaces that have flourished - and in many ways, dominated - their respective industries.
When our founders started PeerStreet, they often found it difficult to explain exactly what our platform is, and the scope of what we had set out to build. PeerStreet isn’t exactly a “marketplace lender”, nor is it a “crowdfunding platform” in the traditional sense of those commonly used categories in our space. PeerStreet is the industry’s first two-sided marketplace for investing in real estate debt with investors on one side and lenders on the other.
From the article, “as my co-founder Brew Johnson likes to say, ‘a one-sided marketplace builds one business; a two-sided marketplace scales thousands of businesses.’ This is the social impact element of two-sided marketplaces and one of its defining advantages.”
This model allows accredited investors to make more informed decisions and diversify their portfolios with unprecedented data and transparency into their investment options. It also provides private lenders with diverse capital sources and technology to make lending processes more efficient. That means they can make more loans to real estate investors who can then purchase and enhance more investment properties. Check out the article and let us know what you think.
Another fantastic piece on the power of two-sided FinTech marketplaces was recently penned by Pete Flint at NFX. It gives additional insights and examples specific to the FinTech space.
If you or someone you know is passionate about aligning the interests of two-sided marketplaces, we’d love to talk to them about a career here at PeerStreet.
We’re thrilled to announce two key upgrades to our Automated Investing product that will help you bring more diversification to your portfolio—with a few simple clicks.
We’ve lowered the minimum investment to just $100 for “small balance reinvestments” when using Automated Investing. This update also expands the investment types available for Automated Investing to include Cash Offer Loans and 30-Day Notes, which have shorter terms than typical bridge loan investment options.
New Industry-Leading Minimum Investment: $100
To help prevent idle cash from simply sitting in your account, you’re now able to automatically reinvest as little as $100 in new loan opportunities on the platform (the minimum was previously $1,000). This better enables you to quickly turn interest payments into active investments.
Expanded Investment Types
Investors can also now select Cash Offer Loans and 30-Day Notes as part of their personal criteria as well, making all of PeerStreet’s current retail investment types available for Automated Investing.
New to Automated Investing?
Automated Investing lets you reserve your spot in investments that meet your specific criteria with just a few clicks. You’ll be notified of each investment reservation, and have 24 hours to cancel for any reason. Please note that yield bumps are excluded from Automated Investing.
Our goal at PeerStreet has always been to level the playing field between Wall Street and Main Street. We’re here to help more people get access to the investments they want. These Automated Investing changes are just one of the ways we’re helping you create a personalized, diversified portfolio.
This week we were honored to see that the USA Today announced PeerStreet had won Comparably’s 2019 Culture Awards for both the “Best Places to Work in Los Angeles” and “Best Outlook for 2019.”PeerStreet’s recognition by Comparably is one of several award wins by our company in the past year, including being named one of the “2019 Best Places to Work in Financial Technology” by American Banker, and being included among the CB Insights Fintech 250 in 2018. PeerStreet, Brew Johnson, reacted by saying, “We are excited for what this year will bring for PeerStreet as we continue to rapidly scale our platform. We’ve now surpassed $2 billion transacted and $1 billion assets under management, and the goal is to continue the amazing work our team is doing while ensuring that PeerStreet remains a place our current and future employees enjoy and are proud to work for.”Brew Johnson founded PeerStreet alongside co-founder and COO, Brett Crosby. In December 2018, Brew was also recognized in Comparably’s “Best CEO for Diversity” category, which was awarded based on the company’s ongoing commitment to diversity, inclusion and a positive work environment as core values. Brew is also the recipient of the 2017 HousingWire Vanguard Award.Comparably CEO, Jason Nazar, commented on the accomplishment, "The pride PeerStreet employees have for their organization is proven time and again with their positive ratings on Comparably. Their placement on our Best Places to Work in Los Angeles and Best Company Outlook lists is an outstanding accomplishment, and is further proof of the company's commitment to building great workplace culture and changing the landscape of the real estate debt market."Comparably is a compensation, culture and career monitoring website that recently released its first quarter 2019 Culture Awards. Based on employee sentiment, these lists recognize companies of all sizes across the nation that have been positively reviewed by their employees for both their outlook for the company’s future and a variety of topics relating to workplace culture. The team at PeerStreet has grown alongside the business, this year having reached 191 full-time employees and continuing to expand its staff across all business areas. We’re hiring if you’re interested in joining our growing team.