Welcome to the third edition of our monthly newsletter, with all the real estate crowdfunding gossip and scuttlebutt that’s fit to print.
Yieldstreet Finally Settles its Ship Scrap Investment Suit
Once and for all, Yieldstreet has settled its ship scrap (“shipbreaking”) investment suit for $6.2 million, Bloomberg Law reports.
As Bruce Kelly of InvestmentNews states, this is the second time in a little over a year that Yieldstreet agreed to pay millions of dollars to clients who invested in poorly performing ship scrap loans. The last time was in September 2023, when Yieldstreet was forced by the SEC to pay an initial $1.9 million penalty.
What exactly was Yieldstreet’s wrongdoing? In short, they wildly misled investors about critical information related to the ship scrap offering. The SEC’s press release sums it up: Yieldstreet failed to disclose to investors a heightened risk that it would be unable to seize the ship in the event of a default, and Yieldstreet had information demonstrating that "ships securing other loans that Yieldstreet affiliates had made to the same borrowing group were reported as deconstructed without any notice or repayment or could not be located because their tracking systems were off.”
This isn’t the end of Yieldstreet’s legal troubles, though. As I reported last month, Yieldstreet is currently getting sued in another class action that alleges “fraudulent inducement, aiding and abetting fraud, violations of federal securities laws, breach of fiduciary duty, and negligent misrepresentation.” The plaintiffs, Michael Tecku, David Finkelstein, and Lawrence Tjok, are all Yieldstreet customers. We’ll keep you apprised of this lawsuit’s progress.
Trump is President Again — What’s Next for Real Estate Crowdfunding?
Donald Trump was recently re-elected to a second term as president, and many commercial real estate professionals are curious about the implications.
CBRE has made several predictions related to federal spending, trade, and taxes under Trump’s administration, all of which will have a sizable impact on commercial real estate. Trump worked in real estate himself and has held pro-business views, although his position on tariffs complicates these considerations (protectionism is generally viewed as bad for business).
Companies will probably lease more industrial and warehouse space as they stock up before Trump’s new tariffs take effect. However, if major trading partners respond with their own tariffs on American goods, this could lead to challenges for the global economy, according to CBRE.
Trump’s policy changes could also affect how goods move around the world and lead to a shift in the industrial areas that are considered valuable. CBRE predicts that industrial demand might move toward locations that handle trade with U.S.-friendly countries — if trade shifts from East Asia to Mexico, for example, industrial properties near Southern ports could become more desirable, while West Coast port areas might see less activity. Additionally, changes to the USMCA trade agreement (up for review in 2026) could impact North American supply networks. Finally, as tariffs make consumer goods more expensive, people could change their shopping habits, which would in turn negatively affect the retail real estate market.
As for taxes, Trump will be unable to modify government funding mechanisms without Congress’s approval, but CBRE expects the “preservation of many 2017 tax cuts as well as potential changes to the cap on SALT (state and local tax) deductions.” They also expect that “existing corporate and capital gains tax rates will be preserved, as will the 1031 tax-free exchange provision.”
Overall, tax policy is expected to remain favorable for both commercial real estate occupiers and investors, especially given that Trump established opportunity zones during his first term as president. (As a result, several real estate crowdfunding platforms launched opportunity zone funds in 2018.) It’s possible that opportunity zones could be part of new tax plans.
Wharton predicts Trump's full policy agenda would add $4.1 trillion to the federal deficit. While Congress will likely limit these policies, continued high spending by both Trump and Congress will impact borrowing costs for real estate investors. The rising 10-year Treasury yield reflects market concerns about deficit spending. Until the government takes concrete steps to reduce spending, CBRE expects continued bond market volatility and higher interest rates as the Fed works to control inflation. The September and November rate cuts were only the beginning.
“The Byers” House from Stranger Things, Now on Arrived Homes
Stranger Things is one of the most popular Netflix shows ever made, and Arrived Homes, the Jeff Bezos-backed real estate crowdfunding platform, is now offering investors the opportunity to own a little piece of it. Yes, you can invest in the Byers family house — the actual house, by all accounts.
According to Arrived, this property in Fayetteville, Georgia was used to film exterior shots for the show (the interiors were filmed in a nearby studio). Funds raised through Arrived will be used to renovate, design, and furnish the property, and it will be marketed on Airbnb as a vacation rental.
Though the project is not affiliated with Netflix, it nonetheless speaks to how real estate crowdfunding platforms can stand out in a crowded marketplace and attract new customers through branded tie-ins.
Synapse’s Ex-CEO Says He Has a Plan to Get Depositors Their Money Back
Remember Synapse, Yieldstreet’s banking-as-a-service provider which went bankrupt a few months ago? Since we reported on that story in September, it looks as though there’s been some new developments.
Jason Mikula, the author of the Fintech Business Weekly Substack, interviewed former Synapse CEO Sankaet Pathak on an X livestream to get more context on what actually happened with Synapse. The conversation gets a bit into the weeds (and is somewhat outside the scope of this newsletter’s focus on real estate crowdfunding), but the biggest takeaways are that Pathak denied he or Synapse ever misappropriated end user funds, and that he is unaware of any criminal investigation into Synapse and has not been contacted by any law enforcement agencies.
Pathak also said that full reconciliation with Evolve (the bank holding about $46 million belonging to Synapse end users) “should be possible.” Fingers crossed that the impacted end users are reunited with their funds.
See You Next Month
Thanks for reading. Stay tuned for more gossip, slander, and scuttlebutt.