Jasper Review

To understand Jasper as an investment platform, we outline key features:

1. Fully digital property investment process

1. Jasper has created a frictionless investment process that is entirely digital. Investors select their investment amount, sign digitally comply to ensure compliance with the terms and conditions, then make an online payment to receive the ownership allocation of the property.
2. Our view is simple - traditionally, commercial land has never been easy to invest in. Jasper is an answer to that problem.

2. Straightforward signup process

• Creating your account on Jasper is intuitive and straightforward.

3. Wide variety of detailed properties

• Jasper has a wide variety of commercial properties to select from. Jasper provides prospectuses on each of the properties they feature, full of interactive demonstrations and details.
• In addition, interactive graphs, maps and media assist investors in getting a more holistic understanding of the property in granular detail.

4. Curated opportunities

• Jasper reviews many opportunities, and only after rigorous vetting, they select suitable commercial properties for investing. Commercial land is a desirable asset for wealth generation and preservation, yet most investors lack efficient access to the asset class.
• Through a tech-enabled marketplace, Jasper is giving more people the chance to take a position in these assets while offering lower minimums ($25,000), lower fees, greater transparency and increased liquidity compared to incumbent providers.
  

5. Manage your portfolio easily

• Jasper allows you to track your investment performance at an asset and portfolio level. Jasper provides easy ways to export your transaction data with a few clicks in many different formats. In addition, Jasper's investor dashboard gives you a holistic overview of the statistics of your investment portfolio.

For more details, Jasper's How it Works page walks you through what you need to know.

Real estate crowdfunding occurs when a group of investors pool their funds together to purchase an investment property. In doing so, everyday New Zealand investors can put small amounts of cash towards commercial property and will likely receive dividends on the investment property's income. The return on investment is dependent on how the property performs over the investment period. For example, COVID-19 may have impacted real estate (as tenants could no longer use their properties and may have broken their leases, affecting rental income).

Know This: How Jasper is similar to Crowdfunding

• Both Jasper and real estate crowdfunding offer investors the chance to pool capital from multiple investors and lower the barriers to entry for commercial real estate.
  
• Traditionally, when investing in commercial real estate, most investors only have enough capital to take a position in one property. However, when investing on real estate platforms such as Jasper, investors can put small amounts of money into several different properties at once.
  
• For example, an investor may place $5,000 in an office building, $7,500 in a shopping mall, and $5,000 in an industrial warehouse. This diversification can help investors reap returns on several different investments instead of only counting on one property whilst spreading the investor's risk across multiple properties, asset classes, and geographies.
  

Crowdfunding marketplaces are mainly transactional businesses, which mean their revenues are tied to what percentage of opportunities they place on their platform. In New Zealand, Jasper is one of the first quasi-crowdfunding platforms explicitly targeting the commercial real estate sector. Similar startups have been founded to target other investment classes, such as Snowball Effect. Compared to other crowdfunding platforms, there are a few differences that Jasper has:

1. Due diligence

• Jasper’s investment team performs robust analysis and due diligence on every property investment they make. The team has worked for a variety of the world's leading property funds offshore.
• Crowdfunding marketplaces typically complete their rigorous due diligence but instead push the onus on investors to conduct their independent due diligence and read through the investment memorandums on their own.
• Crowdfunded deals are often lightly vetted by the internal team, but not to the extent that the team at Jasper go through. Typical crowdfunding platforms act as intermediaries between the company and the investors (e.g. Snowball Effect will serve as a bridge between investors and the company).

2. Fee structure

• Jasper's fee structure is primarily based on ongoing fund management fees and is closely tied to the property's overarching performance. This means Jasper is incentivised to build on the relationships with various stakeholders and drive investor returns.
• On the other hand, crowdfunding platforms operate as a brokerage and typically charge fees on total funds raised, regardless of how well the investment will perform. This fee structure pushes crowdfunding platforms to sell as much of the deal as they can.
• Unfortunately, many advisors adopt this structure, which leads to misaligned incentives between the investors and the marketplace platform.

3. Aligned incentives (Jasper invests alongside its investors)

• Unlike the other land crowdfunding syndicates, Jasper and its operating partners invest alongside investors in every deal (e.g. they are also putting their own money into the commercial properties they are investing in). As a result, Jasper has an aligned interest in properties that produce substantial returns.
• Typically, crowdfunding platforms don't support their capital within the offers on their marketplace and tend to focus more on connecting people who need money with people who have money rather than putting their own money down.

4. Liquidity

• Crowdfunded real estate deals are typically not liquid investments. Most real estate crowdfunding platforms have an investment period of up to 10 years, where investors cannot take out their money (as their money is sitting in a property that will not be sold for ten years).
• However, Jasper has a secondary market that offers investors the chance to sell their property investments to other investors on the Jasper platform. This provides enhanced liquidity options for direct property ownership for a traditionally illiquid asset class – meaning people that want to get more ownership in a property can buy from someone who may want to sell down their stake (e.g. for personal reasons, medical expenses, or to put a deposit down on the house).

5. Transparency

• Real estate crowdfunding syndicates typically have strict reporting guidelines. However, most investors know little to nothing about the actual properties in a portfolio or the fees applied by the property manager. Jasper offers investors complete information and clarity on every property placed on the platform. As a result, investors are given all the knowledge they need to form an accurate investment decision.

6. User Experience and Functionality

• Jasper’s intuitive digital platform makes managing your real estate portfolio enjoyable, flexible, and transparent. Unfortunately, other crowdfunding websites will typically have platforms that aren't as user friendly.
• For real estate syndicates specifically, there is usually no technology platform; the only way to get access to commercial real estate is to sign documents on paper.
  

7. Fast and simple onboarding

• Jasper has a speedy process for investors to create an account and quickly verify their identity. The onboarding experience is entirely digital and takes less than 10 minutes to complete. In addition, their processes are entirely AML compliant.

There are several similarities and differences, outlined below:

REIT Similarities:

1. Liquidity - Investing in commercial land is traditionally illiquid and hard to buy and sell quickly. When investors sell a property, they typically have to wait many months until the deal closes and for all the paperwork to be signed. Both Jasper and traditional REIT's offer improved liquidity by allowing investors to exit quickly through selling their units on an open exchange.
2. Diversification - A well-diversified portfolio contains a mixture of different asset classes to limit exposure to any single asset class. With both Jasper and REITs, investors can invest across a wide variety of properties that help to minimise risk, preserve capital and generate solid returns.
3. Pooling capital - REITs and Jasper pool capital from many different investors, making the asset class more accessible to all. Jasper’s minimum investment amount is $25,000 – meaning investors can access the commercial property at any stage of their investing lives – from beginners to institutional investors.
   

REIT Differences:

1. Less volatile - When you invest with Jasper, you directly own a portion of the property you’ve purchased. This offers significantly less volatility than equity markets and is more closely tied to the underlying asset's performance. Most REITs are listed on a stock exchange and will fluctuate daily, making it harder for investors to stay rational when markets fluctuate.
2. Asset control - Investors can select the markets, locations, and properties they want to invest in and have complete control over which deals they want to pass on when investing on the Jasper platform. REIT investors typically have to buy into a basket of various real estate properties and do not choose which investments are made (the REIT managers usually allocate these). This lack of transparency can mean investors may not see real-time what the underlying investment properties are. Jasper allows investors to make a singular and personalised portfolio tailored to their risk and return preferences.
3. Improved transparency - While most REITs have strict reporting guidelines set out by their LPs and the relevant stock exchanges, most investors know little about the actual properties they are investing in or the fees applied for each parcel. Jasper provides investors with granular data on each property they invest in them.

While Jasper has many benefits for investors, there are a few drawbacks to be aware of:

1. Jasper investors are illiquid (when compared to other asset classes)

• While Jasper does have a secondary market that Jasper investors can use to sell down their stakes, it will not be as liquid as popular exchanges such as the NZX, NYSE or Nasdaq. As such – you still need to find another investor to purchase your stake if you're trying to sell down (or find someone willing to sell you a stake if you're looking to buy).
• In addition, just having a secondary marketplace is not enough – you need a significant volume of transactions to be processed to have enough liquidity to buy and sell when you need to. Finally, commercial real estate is still relatively less popular than stocks or residential property, so that investors may face liquidity issues.

2. Fees compared to direct ownership
While Jasper's fees are much more transparent than REITs LINK or commercial property syndicates, you are still effectively paying for someone to manage your money. Contrast this with residential property, where you are typically paying nothing for someone to manage it (if you arrange tenancies yourself etc). As a result, there is usually a cost associated with using the Jasper platform. For those keen to reduce as many costs as possible, it may be cheaper to invest in other asset classes that don't require an investment manager (or to buy a commercial property direct yourself).

3. A limited supply of properties (for now)
Jasper is a relatively new platform, being only a few years old. As such, their asset base is growing, but they currently have a limited supply of top-quality commercial properties. As a result, the Jasper team needs to physically pitch, negotiate, and purchase each underlying commercial property. This takes time – and as of 2021, the options you will have to invest in commercial real estate are less than you would get compared to offshore partners. However we believe Jasper's reach is scaling and is likely to expand over time.

4. You don't own the whole property
When you invest in a syndicate, you own a small slice of a property. The things you can do with the property are severely limited compared to owning the property outright (e.g. owning your own residential home). This is one of the characteristics of commercial realty, and unless you have $30m or more to invest, it is one of the things New Zealanders will likely have to accept if they want to invest in commercial real estate.

Key takeaways

• Jasper offers investors the chance to diversify their portfolios by putting small amounts of capital into several commercial real estate properties.
• In addition, Jasper provides a transparent fee structure, undertakes careful due diligence, and features a vested interest in every property on the platform.
• As a result, Jasper is one of the first movers in this industry, and the easy-to-use platform is an excellent way for New Zealanders to get into property without all the hassle of going through the property-buying process.

Jasper makes money by charging a fee for providing the platform to invest in commercial real estate, syndicating investors and manage the purchasing process.

Alongside the founders, Icehouse Ventures and other individuals have invested in Jasper. M7 (a European real estate firm) has also invested in Jasper recently.

Jasper is the software platform that bridges the gateway between investors and tenants. Jasper, in general, doesn’t own the properties or manage them outright. Instead, Jasper may work with various operating partners to outsource these functions. Jasper may also co-invest alongside retail investors when purchasing properties.

Companies need to be registered with the Financial Markets Authority (FMA) to sell commercial property to smaller investors. Jasper is registered with the Financial Markets Authority (FMA) as a financial services provider.

Commercial Real Estate (CRE) is a property used exclusively for business-related purposes or to provide businesses with a place to work. Commercial real estate is typically leased to tenants who conduct income-generating activities (like sell goods or services). This broad category of CRE can include everything from a single storefront to an enormous shopping mall complex. Commercial land contains several types, like retailers, office space, hotels and resorts, strip malls, restaurants, and healthcare facilities.

Investing in commercial real estate is slightly different to traditional real estate. New Zealanders are heavily involved in the residential real estate markets, but very few will go into commercial real estate. However, commercial real estate provides several unique benefits compared to traditional real estate:

1. Tangible assets - Commercial real estate is one of the few investment classes that are tangible assets with meaningful intrinsic value. Thus, real estate can provide a great alternative to these assets compared to assets like stocks, bonds, and derivatives.
   
2. Strong total returns - Commercial real estate is usually leveraged and has many high-quality tenants (think businesses rent offices, warehousing and stores). This can produce outsized returns relative to other asset classes, including residential property.
3. Consistent income - Commercial land is typically secured by long leases that give steady income through rent payments. Business leases (which usually range from two to ten year periods) are generally more sticky than residential leases (which typically last one year) – and this can provide additional security that the income generated from the property will be robust, even in challenging economic situations.
   
4. Capital preservation - When properly vetted, leveraged and managed, commercial real estate has strong downside protection, which helps preserve capital.
   
5. Portfolio diversification - The performance of economic land isn't closely correlated with stocks and bonds, providing substantial portfolio diversification when markets are volatile.
   

The two main ways to invest in real estate are direct and through a fund. You can either retain complete control by investing in individual properties (like buying a standalone house or a plot of land), or investing as part of a diversified strategy through a multi-asset fund (through REITs LINK such as Argosy).