Financing Innovative Operating Concepts Through Securitization
Can a new lease securitization concept solve the OpCo capitalization problem?
The past five years have not been kind to venture-backed brick-and-mortar operating companies. Starting with the failure of WeWork’s IPO in 2019 and accelerating as interest rates rose in 2022, venture investors increasing viewed with skepticism companies operating everything from short-term rentals to coliving to managed office.
The absence of venture dollars has forced companies to take more measured—some would say smarter—approaches to growth, shifting en masse away from master leases toward management agreements and other asset-light models.
But the capitalization problem for innovative real estate concepts remains unresolved. While some PropCo seed concepts have arisen, the concept is still niche and only relevant to certain types of operating models. Even for proven concepts, capitalization options tend to be some combination of slow and expensive.
Today’s we’ll take a deep dive into a new financing concept: lease securitization, a novel approach borrowing lessons from the airline and automotive industries being piloted by a new company, Ryse.
Specifically, we’ll tackle:
The OpCo financing problem;
Lease securitization as a solution;
Ryse’s approach;
Challenges with securitization as it stands today;
Securitization in the context of the wider real estate market.