The 30-Minute Interview: A Conversation With Daniel Miller, President of Fundrise | New York Times

Mr. Miller, 27, is the president of Fundrise, a real estate crowdfunding website that he founded with his brother Benjamin, the chief executive. Fundrise has its headquarters in Washington; Mr. Miller works out of the company’s New York office.

The brothers were also principals of WestMill Capital Partners, which focuses on properties in Washington.

Interview conducted and condensed by

VIVIAN MARINO

Q. How do your responsibilities differ from those of your brother?

A. I head up the New York office and lead real estate — real estate sourcing, underwriting, bringing in new transactions. He handles more day-to-day management. He’s more hands-on; I kind of enjoy the creative side of business development of launching new markets.

Q. How is it working so closely with your brother?

A. It’s been great. We work very well off each other, with different interests and different passions. I came out of business school in 2010 and started this with my brother, so it’s my first long-working experience with a partner.

We came from a real estate development background. Our father is in real estate — that’s where it began. He founded Western Development Corporation, and they built around 20 million square feet. We started our own development business, WestMill Capital — my brother and I — and initially built Fundrise as a platform to raise capital for those projects.

Q. Is WestMill still in operation?

A. We still have the initial assets we bought, but we’ve shut down regular operations. We now put all our resources toward Fundrise.

Q. Does Fundrise develop?

A. Fundrise is just the funding platform. We’re just focused on Fundrise as a platform for real estate companies to raise capital.

Our first public offering was in 2012. It took two years of regulatory work to make the first deal possible. Our first public offering was in 2012, and in 2013 we opened it up to third-party real estate operators.

Q. How many transactions have you been involved with so far?

A. We’ve done over 30 transactions in 10 markets across the country. New York and D.C. are our two biggest markets. They make up about half of our business.

We’ve had eight transactions in New York.

Q. Let’s talk about the New York deals.

A. They’re actually in different neighborhoods. Two are in Manhattan — the East Village and Harlem. And others are in Brooklyn — Greenpoint, Williamsburg, Bushwick, Prospect Heights, Prospect-Lefferts Garden.

They’ve all been fully funded. Most of the developers we work with are urban infill developers in major metro areas. Most of these deals are $20 million and below, kind of below private equity radar. We can come in and provide a valuable amount of capital and make use of the technology to raise the funds.

Q. What’s the average amount of capital raised per project?

A. To date, it’s been about $1 million. But we have a large transaction — our largest to date — that will close in 2015. That’s about $10.5 million. That’s in New York.

We’ll have a few transactions that are $5 million or $10 million, so it’s growing very quickly.

Q. Can you disclose a little more about that big project?

A. I can’t comment yet on the transaction. It’s a commercial property.

Q. How much have you raised so far?

A. We raised $38 million for the company and just over $30 million for the transactions. They’re separate numbers; they just happen to be close. Our investors include Silverstein Properties, Rockrose and Forest City.

We did over 20 transactions in 2014 and we raised $25 million.

We hope to do $100 million in 2015, scaled to 25, 30 cities across the country. We’re also looking at Europe, starting in London.

Q. Have you worked on any deals involving the developers that have invested in your business?

A. We haven’t done any transactions with them yet.

They’ve invested in the platform. They’ve had a lot of interest in this concept and we’ve had a lot of meetings with them over the years to educate them on what we’ve been doing.

Q. The big developers can raise money on their own. Why would they want to crowdsource?

A. There’s a real branding and marketing benefit to be raising publicly, and to be connected with investors.

In having these investors in the deals supporting that asset, they’re more likely to spend money at the restaurant, they’re more likely to buy condos. They can actually improve the outcome of the deal.

Q. Most of the projects you helped fund so far have been relatively small.

A. Small to midsize infill. That’s where we found the niche — below institutional private equity scale. There’s less sources of capital and we can be more valuable in those transactions.

Q. Is there a minimum or maximum investment?

A. The minimum is $100. The average investment is about $5,000.

Generally the maximum has been around $1 million, but we have groups that are now coming in for larger amounts — institutional investors have started to look at this. This gives them a window into a new pool of assets.

Q. What kinds of returns do investors get?

A. Most of the returns are between 10 and 16 percent.

Q. How safe are these investments?

A. We haven’t had any failures. Probably the biggest skepticism to date is: What’s the quality of the deals and of the underwriting? And that’s going to have to play out over time.

The 30-Minute Interview: A Conversation With Daniel Miller, President of Fundrise

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