LEX Markets: Is This Commercial Real Estate Trading Platform Worth It?
You can evaluate LEX Markets alongside Godwin Capital.
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Introduction
LEX Markets is a marketplace for commercial real estate that enables investors to purchase shares in commercial real estate structures, generate profit, and sell those shares without limitations. LEX uses a custom trading platform to link investors and real estate firms looking to sell shares in individual properties. Commercial real estate building owners can raise money while maintaining control by using the market to sell equity in their assets.
How did Lex Markets start?
The concept for LEX Markets came to Founder Drew Sterrett about one late night in 2017 when his brother Dean called him at work asking for investing advice. Dean, who was 22 at the time, complained to Drew, who was 24, about how they could not directly own real estate holdings just because they were unaccredited investors. The brothers in July 2017 then decided to establish LEX to address such concern which they deemed other (wanna-be) investors can relate to.
How does LEX Markets work?
Under the 2012 Jumpstart Our Business Startups Act, LEX Markets issues securities that non-accredited investors may purchase. With the help of the act’s Reg A+ provision, many public offerings had their accounting and disclosure requirements eased, making them more accessible to investors with net worth under $1 million. The provision allows issuers to raise up to $50 million.
LEX Markets uses quite a simple process, as it collaborates with owners to establish new publicly traded shares in the property. Property owners will determine the amount of each asset they want to sell on the platform. Investors can then acquire shares in the assets via initial offerings or secondary markets like stock exchanges. Investors can make money when the property owner pays distributions, which come with the tax advantages of real estate ownership.
Lex performs the due diligence for you and provides information about the investment so the decision to purchase or sell the property is all yours, just like with a stock.
As arranger, LEX Markets will engage independent appraisers to ascertain the amount of equity each $100 unit represents. Investors can place their initial order for these units and then trade them after property owners pay to post their deals on the platform.
No other platform provides retail investor access, publicly tradable shares, and the option to buy shares in specific commercial real estate structures like LEX Markets does. Accreditation requirements, lack of secondary trading, and/or availability of only pooled investment vehicles like real estate investment trusts are some of the limitations of other direct real estate investment platforms. In contrast to a REIT, LEX shares represent ownership interests in a single piece of real estate, not a portfolio.
Only LEX Markets offers publicly tradable shares, securities in specific real estate holdings, as well as access to non-accredited investors.
Top benefits
The major perks LEX Markets offers include:
• investments in individual commercial properties
• the LEX ATS (Alternative Trading System) that allows investors to trade shares after an initial offering
• being able to invest as a non-accredited investor
Who can invest on LEX Markets?
Anyone who is an American citizen or permanent resident and is at least 18 years old can use LEX .
Currently, international investors cannot invest on the marketplace. However, LEX said it is working on enabling foreign accounts in the future.
How do you make money on LEX Markets?
When the underlying real estate property generates income, LEX stockholders get quarterly distributions. Each property’s anticipated distribution rate is displayed on the platform.
The performance of the underlying property or other market factors may cause changes in the market value of LEX Markets shares, which can be traded on LEX ATS (Alternative Trading System).
How does LEX Markets make money?
Based on a trailing 90-day market value, LEX’s platform charges a quarterly fee of 0.25% (1% per year). The charge is subtracted from the issuer’s quarterly distribution payments. LEX Markets does not impose commissions on trades.
Is LEX Markets safe?
Investment bankers at LEX Markets have scrutinized each property on the platform based on its potential to produce consistent quarterly distributions to shareholders. The fact that distributions will be made at all or at the expected rate is not guaranteed. The LEX Alternative Trading System (ATS), which is powered by NASDAQ, makes secondary trading possible. Securities law rules that provide unlimited secondary trading are used when issuing shares.
In January 2022, LEX Markets secured a $15 million Series A investment led by financial technology firm PEAK6. LEX Markets now have breathing room in this fiercely competitive private real estate syndication market thanks to the investment.
LEX Markets strikes partnership with NASDAQ
In order to power its trading platform, LEX Markets announced on June 25, 2020, that it had collaborated with online global marketplace Nasdaq. The alternative trading platform from LEX will be powered by Nasdaq’s Marketplace Services Platform (ATS). With tried-and-true technology in place, LEX will quickly and efficiently open up prospects for matching between property owners and retail and institutional investors that were previously unattainable. Through open price formation methods that inspire trust among investors and participants, the company will also be able to show its honesty and reliability.
How do you create an account on LEX Markets’ platform?
Enter your email address to register at www.lex-markets.com or on the marketplace’s iOS app, which is accessible from the App Store.
In order to open a brokerage account with LEX Markets, the marketplace is required by federal legislation to collect certain basic information regarding an investor’s financial situation and investing objectives.
Take note that LEX Markets is a startup so it might be a good idea to hold off on making any investments for a few years to observe how the platform develops. Platform risks exist when investing in emerging firms. Investing in a commercial real estate venture and then having the platform fail is the last thing you want to do.
However, the investment decision is, again, yours alone to make. Any form of investment does not come without risks. Take a cautious approach and always do your research before jumping into any investment decision.
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