Sharestates offers help with margin calls amid coronavirus volatility

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Real estate crowdfunding company Sharestates launched a program Wednesday offering liquidity to private lenders and loan aggregators contending with margin calls as a result of market volatility related to the coronavirus outbreak.

"Our capital markets team has been working around the clock with local and global peers in an effort to blueprint a forward-looking plan. While we do not know where or when the dust will settle we do have confidence in the market, as documented in historic trends of activity post crisis," CEO Allen Shayanfekr said in a press release.

Allen Shayanfekr is CEO of Sharestates.

Investors on Sharestates' platform include institutional players and individuals, and mortgages that trade on the platform range from whole loans to nonperforming loans. The company aims to offer investors net annualized returns of 8%-12% and scores investments based on a 34-point matrix, then seeks to offer borrowers capital and the lowest-available rate.

Several mortgage lenders and investors currently struggle with various types of margin calls as a result of coronavirus-related volatility and, in some cases, associated government interventions.

Examples include AG Investment Trust, a real estate investment trust that trades under the ticker symbol MITT.

The company recently filed a lawsuit against the Royal Bank of Canada related to the bank's markdown of commercial mortgage-backed securities collateral. This appears to be the first legal challenge by a REIT to margin calls, according to a report by Keefe, Bruyette & Woods.

"MITT has sued RBC under the claim that RBC unilaterally marked down the value of MITT's CMBS collateral rather than a source agreed to by both parties (investors usually have the right to challenge a mark presented by a dealer)," Eric Hagen and Bose George, analysts at KBW, said in the report. "MITT also asserts that RBC didn’t sell its collateral in a 'recognized market' or in a manner that was ‘commercially reasonable’ given the unprecedented illiquidity in the market at the time."

Litigation is spreading broadly in response to the coronavirus.

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Fintech Capital markets Originations Secondary market NPL Lawsuits REITs CMBS Loss mitigation Coronavirus