Evan Gentry is back in the real estate game, with a touch of fintech this time around.
His Ladera Ranch-based M360 Advisors, a commercial real estate debt fund, just got the approval of the South Korea Financial Supervisory Service to receive investments from large institutions there.
Gentry predicted his assets under management may jump from $140 million to more than $400 million this year, in large part on the strength of the South Korea link.
M360 Advisors is a subsidiary of Gentry’s Money360, a website that facilitates loans between borrowers and lenders in the commercial real estate sectors.
The website aspires to the heights achieved by a select few consumer lending sites, including Prosper Funding LLC’s Prosper.com, with over $8 billion in funded loans, and the Lending Club Corp.’s Lendingclub.com, which is now valued at $2.2 billion on Wall Street.
“I saw the opportunity to take this peer-to-peer lending based on consumer lending like the Lending Club and Prosper and apply the same model to commercial real estate,” he said. “It’s actually a really exciting time.”
Gentry has a long history as an entrepreneur in real estate.
He and two co-founders in 1996 began Irvine-based MoneyLine Lending Services, which performed outsourced mortgage servicing for 50 banks and was featured in Inc. Magazine’s list of the fastest-growing private companies. They sold the firm in 2006 to Genpact, an outsourcing and IT management firm spun off by General Electric in 2005.
Gentry said he’s not permitted to reveal the price paid for MoneyLine, which had 200 employees by the time of the sale.
It seems the sale and Gentry’s next move were well matched to market conditions, in any case.
“The timing was good,” he said. “In real estate finance, you can be successful throughout all aspects of the cycle.”
The 2007-2008 real estate crash that signaled the Great Recession led Gentry to focus on G8 Capital, which bought distressed properties. The firm had $800 million in distressed loans at one point.
“We worked them out with borrowers and then sold most of the properties,” Gentry said. G8 Capital still holds $150 million in assets, mostly in office properties.
He decided regulations had become clearer by 2014 for a website like Money360, when he hired his first employee. Now he’s up to 25 workers with plans for 10 more this year.
International Investors
Gentry is expecting assets at M360 Advisors to jump after winning approval from South Korea’s regulatory agency, which permits a unit of Money360 to accept money from that country’s hedge funds, corporations, pension funds, insurance companies and other institutional investors.
Since becoming registered, the fund has received more than $65 million from one of South Korea’s oldest and largest financial institutions. Gentry declined to name any of the investors.
M360 Advisors works with foreign investors from South Korea, China, Singapore, South Africa, Europe, Canada, the Netherlands and Kuwait. The company is focusing expansion on South Africa and China.
International investors are seeking higher yields and are worried about the effects of the United Kingdom leaving the European Union, Gentry said. They want short duration, high-yield fixed-income alternatives to traditional fixed-income investments.
“In general, there is a significant interest worldwide to participate in U.S. real estate,” Gentry said. “We’ve had investors from all over the world who have found us.”
Money360 provides those higher yields by charging borrowers interest rates of 8% to 10%.
Flexibility
Money360 sources, underwrites, closes, sells and services small- to mid-balance commercial real estate loans on properties throughout the United States. It specializes in bridge loans collateralized by U.S. commercial real estate property secured with a first-priority lien at conservative loan-to-value ratios.
Gentry said his company can give more lenient terms and flexibility than banks and can close loans within two weeks. Investors reap the high yields while Money360 garners the origination fees and services the loans. To date, it has funded $200 million in loans.
It sells whole loans to institutional investors, including its subsidiary, M360 Advisors. In other words, the loans are sold to “wholesalers,” such as fund managers, who in turn sell diversified funds to retail investors.
Money360 is based in the only corporate office park in Ladera Ranch, where Gentry lives. While he may consider moving his office to other cities, he plans to stay in Orange County because he finds many talented people in real estate.
“Orange County is the hub for technology-based real estate lending, because there is a lot of technology,” he said. “When we need to hire new people, we have a long list of people to hire.”
