LEX, a real estate investment platform founded by Drew Sterrett and Jesse Daugherty, has recently announced that New York City’s first IPO of a building — 286 Lenox Avenue in Harlem — is now trading under the ticker symbol TESLU. This is the first time a building in New York has been securitized and offered to the public, signifying major changes in commercial real estate investment.
LEX was founded with the mission to enable people of all wealth backgrounds to participate in commercial real estate investing, while also adding value to the commercial real estate landscape. For most people, commercial real estate investing can seem out of reach, requiring large amounts of income and capital. However, LEX is looking to make CRE investing more accessible. Now, people can invest in buildings in the same way they invest in stocks.
“There’s now a single individual building in New York City that has a ticker symbol and is trading on the LEX ATS, 9:30 am to 4:00 pm,” Daugherty said. “Basically, it means any investor that comes to the site now can just sign up and buy in on the secondary market, or if they purchase an IPO and at any point they want to exit the investment, they can sell on the secondary market.”
The building being traded houses a Wells Fargo on the ground floor as the anchor tenant, with two other tenants on the top three floors, Daugherty said.
For those new to investing but want to learn more about the building and how to become an investor, Sterrett suggested looking at the individual property pages on the asset itself. These listings break down exactly what you’re purchasing into.
“So [investors] can become fully educated on how long the leases are, who the tenants are, terms, where the market is, market comparables and everything else,” Sterrett explained.
From there, Sterret said, buyers can either use a LEX brokerage account to invest in the property on the secondary market, or they can try purchasing from their own traditional brokerage account, just by entering the ticker, as you would any other traditional stock.
LEX currently has one other publicly traded building located in Portland, Maine, with a third building expected to come later this month, and a fourth right after that, with a longer pipeline in the works, Sterrett and Daugherty said. So far, they’ve seen a wide variety of investors, from initial investors with small portfolios to large, institutional investors, Sterrett added.
“The goal for the remainder of the year is to keep bringing deals public and giving our investors access to new deals,” Daugherty said.
With the Harlem building, Sterrett and Daugherty aim to even the playing field for smaller investors.
“We just opened up an opportunity for the first time for the Harlem community to buy into Harlem,” Sterrett said. “This really allows people to invest in their own communities and actually have pride of ownership.”
Daugherty also noted that LEX does not own these publicly traded buildings, and they’re not buying buildings and reselling them to the public. Rather, LEX works with the existing owner of the building to sell a portion of their equity to investors.
“We really view it as democratizing the real estate investment market at large by removing everything that’s associated with buying a real estate asset in the first place: so cost of entry, high cap, high minimums, accreditation requirements and also the illiquidity and lack of being able to control your own destiny in your investments,” Sterrett said.
Now people are able to invest as little or as much as they want in income-producing properties and receive passive income as a result, Sterret added. Sterrett and Daugherty hope that, within a few years, the LEX model becomes the norm in commercial real estate investment.