Until recently, the Hamburg-based startup Exporo was considered one of the great hopes in the German fintech sky. A company that focuses on real estate investment with blockchain technology. Exporo issues token-based bonds on the Ethereum Blockchain, under a regulated securities prospectus. By tokenizing real estate, the processes become more transparent, faster and streamlined. This offers investors a simple and direct entry into the real estate sector.
Market leader for crowd-funded real estate
Renowned venture capitalists such as e-Ventures, Partec or Holtzbrinck Ventures still invested 43 million euros in the company in 2019. As an indirect consequence, this resulted in an enterprise value of approximately 150 million euros. With the acquisition of the pursuer “Zinsland”, the market share increased to 85%. Even without this acquisition, Exporo was already the proven market leader for crowd-financed real estate projects.
Outsourcing of real estate management
The company employs a total of 19 people to take care of property management. As reported by finanz-szene.de, all employees have now received notice of termination at the end of the year. The outsourcing of the real estate management is planned. In the future, this task will be taken on by the external company Sonar Real Estate, which is also based in Hamburg. However, it will not remain with just this one external partner. Day-to-day business tasks such as screening, liquidity management and purchases as well as property management are equally operational components that are on the agenda for outsourcing to external service providers.
Restructuring costs jobs
The restructuring of the company is considered confirmed, as well as the redundancies in the transaction and asset management team. Since there was a simultaneous increase in jobs in other areas of the company, the number of employees is not reported as decreasing. In addition, employees were given the opportunity to transfer to other positions either internally or to the new portfolio manager Sonor Real Estate.
Rebranding: “Propvest” new brand name
Still in July 2021, Exporo initialized a new digital platform for investing in portfolio projects under “Propvest”. It is apparent that a rebranding is in the making to support the realignment. In this context, Propvest is not only the new brand name for Exporo’s investments in portfolio properties, but the central product. This is made clear by the following features:
- Internally, a rebranding process is underway. The company now only manages 65 portfolio projects worth around 250 million euros on the Propvest platform
- Neither in the imprint nor on the web page of Propvest is however a reference to it
- The former name “Exporo Investment GmbH” has now been changed to “EPH Investment GmbH”, whereby the abbreviation “EPH” is an acronym for “Exporo Propvest Hamburg”.
The strong man at Propvest is Simon Brunke
Co-Chief Executive Officer & Co-Founder of Propvest is Simon Brunke. He studied “European Business Management” at the University of Applied Sciences and Arts in Hanover. In 2014, Brunke founded Exporo AG. He is a board member for Propvest and Exporo and sees himself as a “catalyst manager”. With Propvest, Brunke wants to take the next step: There should be one of the largest and most attractive asset classes in the world. Flexible and easy to use for each of us. True, the return on tokenized real estate is enticing. Blockchain can reshape the real estate market – and make it easier for investors to access the market. But investors should be aware of the risks of tokenized debt.
Strategy change after heavy losses
The change in strategy to Propvest, along with internal restructuring, points to a consequence of difficulties Exporo may have had in the area of project financing. In recent years, this resulted in the delay of several projects. To make matters worse, new business slumped in the new year. In 2019, Exporo was still the market leader with two-thirds market share of brokered real estate financing amounting to 196 million euros. A year later, the first Corona year, the volume fell to 136 million euros. The company thus recorded a whopping 31% decline.
Business downturn: building a new brand
The company sees the outbreak of the pandemic as one of the main reasons for the decline. However, looking at the figures, it turns out that the volume of the overall crowdfunding market, without including Exporo’s business figures, increased by 1% to 119 million. This is based on reports and calculations by the crowdinvest.de portal. Exporo’s annual report saw an increase in brokered capital to more than 400 million euros in 2019. The unexpected decline had to be corrected accordingly. It is therefore obvious that one consequence drawn from the decline was the establishment of a new brand with Propvest. This could now strengthen the less profitable, but also less risky existing business. Exporo also conveyed this to its investors, from whom it still received an investment volume of 16 million euros for disposition in January.
Propvest launch on the market in summer 2021
Propvest celebrated its debut on the market in July 2021. Since then, the newly acquired customer base has exceeded a low, three-digit threshold. Meanwhile, the company’s website refers to 12,500 new investors. This is merely due to having internally reallocated investors from Exporo to the new Propvest brand. The three-digit number of new customers was neither confirmed nor denied by the company. Instead one refers there to the fact that the new mark Propvest develops according to plan and expectation and one aims to intensify marketing as soon as possible.
Marburg projects and other difficulties
In Marburg, Exporo had two lucrative projects worth around EUR 4 million. Here, however, the real estate developer had to file for bankruptcy. It must fear in the consequence approximately 800 investors for their money. Difficulties had also been reported with other, smaller projects. According to reports, fixed deadlines for the repayment of investments could not be met. Small investors had to exercise patience. In the meantime, 16 of Exporo’s current projects have not yet been repaid to the swarm investors. The cumulative investment volume amounts to approximately 30 million euros. The projects “Marburg Portfolio I” and “Marburg Portfolio II”, which have been declared illiquid, are probably not insolvent, as initially reported. It is highly probable that they are fraudulent. In the judicial environment this is considered confirmed.
Exporo methods: Private Placements
Exporo offers so-called private placements to qualified investors with a particular affinity for investment. These are non-public offerings that are generally not subject to restrictive regulations. So far, this asset class offered by Exporo has hardly been noticed in the public sphere. Five of the 34 projects still running were in arrears this year alone, with payouts more than 5 months behind schedule. There is still uncertainty among investors about an actual payout for three projects.
Exporo seems besides, according to public prosecutor’s office, real estate flipping to have operated. With this fraud method repeated purchases and repurchases of building projects take place, which drive the purchase price artificially upward. Only with the help of the real estates shown much too expensively could the Exporo responsible persons erschleichen themselves credits in extensive height. In all probability the funds of the Exporo investors standing in this connection were also embezzled.
Exporo's business divisionsExporo AG is divided into two different business divisions. On the one hand, there is the area of financing, which essentially covers the project business with new properties, and on the other hand, there is the area of existing properties. Here, only existing properties are brokered. In the future, the focus will be on existing properties. In the long run, Exporo will become a pure broker through the Propvest strategy, which only forwards the money of the investors, but does not operate a management business of real estate
FAQ – Frequently asked questions
The Propvest real estate investment platform gives investors access to professionally managed portfolio properties. Propvest or an external asset manager acquire the properties. Long-term financing is provided through a bank loan and the issuance of a digital security.
As always, there are risks involved in investing in a propvest property. There is no such thing as an attractive interest rate and risk-free return at the same time. With Propvest, the risk results from the market development, the property as such, the investment structure and the acting persons.
As an investor, you can flexibly offer real estate shares for sale on the Propvest trading platform. Investors registered with Propvest can purchase these shares. As a seller, one sets the desired selling price. The platform offers the necessary infrastructure to process all transactions quickly and smoothly.