Lex Partners With Nasdaq for $100 Apiece Property Trades

(Bloomberg) -- Lex Markets Corp. has reached an agreement to use Nasdaq’s technology to power its trading platform, which will allow bets of as little as $100 at a time on commercial real estate.

“Nasdaq’s technology will help us achieve our goal of opening up the real estate asset class to a demographic of investors who have never had access,” Drew Sterrett, co-founder and CEO of Lex, said in an interview. He said investors will own securities in properties alongside landlords who will maintain an ownership stake or “skin in the game,” while obtaining liquidity in seconds rather than months or years.

The New York-based startup will use Nasdaq Inc.’s recently-launched marketplace services platform. “We look forward to working with Lex as their technology provider as they reimagine real estate securities trading to make the multi-trillion U.S. commercial real estate market more open and transparent,” said Paul McKeown, a senior vice president and head of Marketplace Operators and New Markets, Market Technology at Nasdaq, in a statement.

Sterrett said Lex’s future offerings pipeline includes stakes in properties majority-owned by public and non-traded real estate investment trusts as well as closely-held firms such as Thor Equities, the Joseph Sitt-led firm that invests in commercial real estate, including warehouses, life sciences properties and hotels. Thor and Alan Patricof’s Greycroft were early investors in the company.

Investor Interest

Lex has begun accepting indications of interest in three properties: a transport hub known as the Milwaukee Intermodal Station in Milwaukee, Wisconsin, an office building with attached retail space at 286 Lenox Avenue in the Manhattan neighborhood of Harlem, as well as a parking station known as Gateway Garage in Portland, Maine.

“The Lex-Nasdaq tie-up should be a game-changer, opening up access to an untapped market for the accredited and unaccredited investor and dramatically lowering the cost of capital for the real estate industry,” Lex’s chairman and chief strategy officer Craig Hatkoff said in a statement.

In addition to retail investors, some of which will be introduced to Lex through banks’ wealth management units and financial advisers, family offices are poised to buy slices of properties using the Lex platform.

Wilton Partners plans to spend at least $20 million across various properties and Bren Ventures, which invests on behalf of the late Peter Bren’s family office, has signaled its support. Jon Bren, a Bren Ventures managing director, said in an emailed statement that he believes Lex “will quickly scale into the dominant venue for this novel asset class to trade.”

Market-makers such as Puma Capital are slated to provide liquidity when trading begins as soon as this summer, Sterrett said. The company has also partnered with Nasdaq Private Market to facilitate transactions.

Alicia Glen, a former deputy mayor of New York, and Marty Edelman, an attorney at Paul Hastings, have joined Lex Markets as directors, Bloomberg reported in April.

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