FC Barcelona striker, Martin Braithwaite, and his uncle, Philip Michael
The quarantine has put the sporting world on timeout, but there are still moves being made off the pitch. As Martin Braithwaite and the rest of the FC Barcelona side wait to get back to action, Braithwaite’s uncle and partner, Philip Michael, has filed for a $50 million real estate IPO, I have learned.
According to documents filed with the U.S. Securities and Exchange Commission in New York City, an initial offering is limited to $1.07 million at $250 per share, at a $25 million valuation.
“We want to help create new millionaires,” Michael, CEO of real estate startup NYCE Cos., told me exclusively, citing a growing wealth gap among millennials of color in the U.S.
The offering debuts on WeFunder April 21, an online marketplace for smaller-scale public offerings.
“Millennials, particularly minorities and women, don’t really have access to ownership,” Michael said. “Most of their net worth sits in cars and jewelry.”
The average US-based millennial has a net worth of $8,000 and still relies on financial aid from parents, Business Insider reported in February.
The Mercer building in New York City, owned by Philip Michael
A 36-year-old millennial investor himself, Michael said his goal is to team up with 100,000 underrepresented investors, all of which will own a piece of both the buildings, but also the proprietary technology used to run the buildings.
“Obviously, we’re not going to make millionaires with this alone, but we want to be a pillar of what we hope, down the line, becomes generational wealth with each investor,” Michael said.
The news comes on the heels of Braithwaite and Michael’s $10 million AI-powered student housing complex breaking ground in Philadelphia.
According to the offering circular, NYCE has $57 million under development, which includes the Philadelphia project, as well as the AI technology used to manage the properties.
While the initial offering is limited to just $1.07 million, a total offering of up to $50 million could open up as soon as May, depending on the status of the COVID-19 pandemic, Michael said.
Philip Michael's Summit building
“The idea is to create a millennial micro-economy within the ecosystem of real estate, backed by a larger mission to empower a generation that has been dealt a crappy hand, financially,” he said.
Up until very recently, commercial real estate and pre-IPO investments of this kind were usually reserved for “accredited investors”—investors with a net worth of $1 million and above.
This same law allowed “accredited” investors to get in on Uber in 2010, making a $1,000 investment then worth $5 million by the time the company went public last year, the Wall Street Journal reported.
In 2012, however, President Barack Obama signed a law called the 2012 JOBS Act, making it legal for non-accredited investors to invest in real estate through so-called mini-IPOs.
Philip Michael's building during construction in Philadelphia
“Each early investor gets to own a piece of each current, and future, buildings, will be full-on partners with us and can claim each project as theirs,” he said.
It’s the same regulation that popularized crowdfunded real estate startups such as RealtyMogul and Fundrise, both of which have raised over $500 million.
Shortly after, Fundrise made news years ago when they offered investor access in the post-9/11 World Trade Center, allowing “everyday investors” to own a piece of the iconic development.
“There’s a saying that the rich get richer and there’s truth to that. But that doesn’t mean others can’t build wealth, either,” Michael said.
According to documents obtained by me, NYCE Cos. has a Series A term sheet in circulation that would put the real estate startup at a $65 million valuation—a 2.6x above the IPO valuation.
Philip Michael has a spectacular vision to make 100,000 millionaires
“Right now, we’re focused on this mission,” said Michael, adding that the ultimate goal is to grow to $1 billion in assets by 2025. “However, I’d rather not comment on any future funding rounds at this time.”
A former journalist and entrepreneur, Michael began buying property in New York in 2016, before teaming up with his father and his nephew Braithwaite in 2017.
FC Barcelona’s Braithwaite made waves in February when he signed with FC Barcelona in one of the more unique deals in recent football history, signing with Barca outside of the transfer window due to a slew of injuries.
Michael said that he’s in talks with other athletes and venture funds with similar missions about potential collaborations.
“There are others that share this mission, as well, and we’d love to do something with them to further the mission of spreading more wealth,” Michael said. “Whether it’s joint ventures or just creating awareness around the importance of financial literacy.”
