The American construction capital stack is broken. Regional banks have retreated from construction lending, leaving developers stranded with entitled land and no path to financing. Simultaneously, pension funds seek stable, long-duration yield but lack access to housing at wholesale prices. Meanwhile, renters build no wealth despite dedicating 30% or more of their income to housing costs.
Spot Origin proposes a unified solution: a platform that connects pension capital to new development through forward purchase agreements, creates liquid yield strips backed by real property income, and—critically—allows tenants to purchase these yield strips to offset their rent and build wealth over time. We call this income-driven ownership.
In 2023, regional banks—historically the backbone of construction lending—retreated en masse. Construction loan originations dropped 38% in a single year. Loan-to-cost ratios fell from 75% to as low as 50%. Seven consecutive quarters of decline followed. Developers who once secured financing with 25% equity now face demands of 40-50%, killing project IRRs and stranding entitled land across the country.
This is not a temporary correction. Basel III capital requirements, CRE concentration concerns, and post-SVB regulatory scrutiny have structurally reduced bank appetite for construction risk. The vacuum is real, documented, and persistent.
Key Data: Construction lending down 38% YoY. LTC ratios at 50-65%. 71% of banks tightened standards for construction and land development loans. (Sources: FDIC, Federal Reserve SLOOS, MSCI Real Capital Analytics)
Spot Origin fills this vacuum through a mechanism we call the Tristate Swap—named for its Cincinnati origins and the three-party transformation it enables.
The core insight: banks don't want to lend against dirt. They want to lend against credit. If we can present them with an investment-grade contract rather than construction risk, their calculus changes entirely.
Here is how capital flows:
Critical Point: The pension is not buying a hole in the ground. They are committing today to purchase a completed, stabilized, fully leased building at a locked-in price. They take delivery only after construction is done and occupancy targets are met. Construction risk and lease-up risk stay with the developer and Spot Origin—not the pension. The pension gets a brand new asset at wholesale cost with day-one cash flow.
This structure does not guarantee 100% LTC in all cases—banks may still require developer equity for completion alignment. However, it enables movement from today's 50-60% LTC toward 80-85% LTC, unlocking significant stranded pipeline. Our goal is to unblock construction, not enforce any particular structure.
We must be clear about what the FPA does and does not do. Banks aren't just evaluating "whose credit is behind this"—they're evaluating what happens if the project doesn't complete. A pension's FPA commitment is typically contingent on completion and stabilization. If the developer fails mid-construction, the pension isn't obligated to buy a half-finished building.
The FPA improves the bank's position by providing certainty on takeout and a better recovery scenario if everything goes right. It does not eliminate construction risk—it transforms it. This is why we layer in additional credit enhancement:
Together, this stack addresses the bank's core concerns: GMP and bonding handle completion risk, insurance handles casualty risk, developer equity handles execution and lease-up risk, and the FPA provides certainty on permanent takeout. No single instrument solves everything—but the combination moves LTC from 50-60% toward 80-85%.
The FPA structure is designed to be attractive to pensions: they commit today at construction cost, but take delivery only after the building is completed and leased. They are not buying construction risk—they are locking in a price on a future stabilized asset.
What the pension gets:
The remaining risks to the pension are market risk (values could decline between commitment and closing) and counterparty risk (Spot Origin or developer could fail). These are real but manageable—and in exchange, they're getting a stabilized asset at a 20%+ discount to market.
That said, the first institutional commitment is still the hardest part of the business. We have no track record yet. Likely early capital sources are:
Our approach is to secure a strategic partner first, prove developer demand through LOIs, complete one or two successful projects, and then approach larger institutions with a track record. We do not expect CalPERS to sign our first FPA.
Traditional real estate bundles ownership, income, and responsibility into a single package. You own the building, you receive the rent, you fix the toilets. This bundling is the reason real estate is illiquid, inaccessible, and burdensome.
Spot Origin unbundles these elements:
| Element | Who Holds It | What They Get |
|---|---|---|
| Deed (Legal Ownership) | Spot Origin | Responsibility, liability, 15% of NOI as yield strips |
| Yield Strips (Income Rights) | Investors / Tenants | 85% of NOI, clean income, no burden |
Spot Origin exists so that the yield can exist unencumbered.
Property managers are a risk element, not reliable custodians. Someone must hire them, fire them, and ensure the building performs. That accountability layer is Spot Origin. We are the manager of managers, the custodian of the yield strip's performance.
Private real estate is illiquid. Exits take years. Transaction costs are punitive. This illiquidity is the primary barrier to broader participation in housing wealth.
Spot Origin offers quarterly liquidity through a simple mechanism:
But here is the critical insight: the real liquidity comes from tenants.
When an institution wants to exit, who wants to enter? The people already living in the building. They're already paying. They already know the asset. They just need an invitation.
The quarterly NAV mechanism with a 5% redemption gate works fine in normal times. But we must acknowledge the question: what happens during economic stress?
The concern: During a downturn, tenants facing hardship become sellers, not buyers. If retail and institutional holders both want out simultaneously, the gate creates a trapped capital problem.
The mitigants:
The honest answer: In a severe stress scenario, liquidity will be impaired. The gate will bind. Some sellers will wait. This is true of any private real estate structure. What we offer is better liquidity than traditional private real estate (years to exit, punitive transaction costs), not perfect liquidity. But the underlying asset—workforce housing—is among the most resilient real estate classes. The building stays full. The rent gets paid. NAV stabilizes. Patient holders are rewarded.
This is where Spot Origin becomes more than infrastructure. This is where it becomes a movement.
Important Note: The tenant ownership features described in this section represent the long-term vision (Phase 2-3), not the launch product. Spot Origin will initially serve institutional investors only. Tenant participation requires Reg A+ qualification, tenant financing partnerships, and operational infrastructure that will take 2-4 years to build. We include this section to explain where the model goes—not to promise immediate availability.
The path to homeownership requires a massive down payment ($60,000+), pristine credit, stable income verification, and a 30-year commitment to an illiquid, undiversified asset. For most Americans, especially renters, this first rung is impossibly high.
A tenant in a Spot Origin building can purchase yield strips—fractional ownership of the building's income stream—with a minimal down payment and a small monthly contribution. Better yet, they can mortgage the yield strips themselves.
The Self-Funding Loop: A tenant takes a $30,000 loan to purchase yield strips. At 5% yield, the strips generate $125/month in income. If the loan costs $187/month (7.5%), the tenant pays just $62/month out of pocket. Over time, as NOI grows 3% annually, the yield catches up to the payment. By year 13, the asset pays for itself. After that, it pays the tenant.
This is income-driven ownership. The tenant doesn't buy an asset and hope it appreciates. They buy an income stream and let it pay for itself.
| Year | Yield Income (5% + 3% growth) | Loan Payment (fixed) | Net Cost |
|---|---|---|---|
| 1 | $125/mo | $187/mo | -$62/mo |
| 5 | $145/mo | $187/mo | -$42/mo |
| 10 | $168/mo | $187/mo | -$19/mo |
| 13 | $187/mo | $187/mo | $0 |
| 15 | $200/mo | $187/mo | +$13/mo |
| Factor | Traditional Mortgage | Spot Origin |
|---|---|---|
| Down Payment | $60,000+ | $500-1,000 |
| Monthly Cost | $2,000+ | ~$62 |
| Credit Requirements | 700+ score, DTI ratios | Loan secured by income stream |
| Liquidity | None (must sell whole house) | Quarterly |
| Diversification | One asset, all risk | Whole building, 100+ units |
| Maintenance Burden | Owner's responsibility | None |
Traditional multifamily operators target 95% occupancy. Market-rate buildings compete on amenities: pools, gyms, rooftop lounges. These cost money to build and maintain. They attract tenants who leave for the next shiny thing.
Spot Origin targets 110% occupation—and we mean that literally.
110% = 100% physical occupancy + 10% rent premium
Ownership is the amenity. A tenant who can build equity in their building will pay more to live there—and stay longer.
Consider two identical buildings across the street from each other. Same unit mix. Same finishes. Same location. Building A is a conventional rental. Building B is a Spot Origin building where tenants can purchase yield strips.
In Building B, the tenant isn't just renting—they're accumulating. Every month, a portion of what they pay can flow back to them as yield. They have a stake. They care about the property. They report maintenance issues before they become expensive. They renew their lease because leaving means leaving their investment community.
What does this create?
The 10% rent premium plus reduced operating costs from lower turnover and better tenant care means Spot Origin buildings generate meaningfully higher NOI than comparable conventional properties. This isn't hope—it's incentive alignment. When tenants benefit from the building's success, they act like owners. Because they are.
For decades, the first step onto the ownership ladder has been too high for most Americans. Save $60,000. Qualify for a mortgage. Commit to 30 years. Hope nothing goes wrong.
Spot Origin lowers that first step to $500 down and $62/month. A college student renting an apartment can begin building ownership today. By graduation, they own a meaningful stake in real property. By middle age, their yield income offsets a significant portion of their rent.
This is not charity. This is not subsidy. This is capital markets working correctly—connecting those who have capital with those who need it, and those who want to build wealth with assets that produce income.
Why Yield Strips, Not Fees: Spot Origin's 15% compensation is structured as yield strips—the same instrument we offer tenants and institutions—rather than management fees. This creates three advantages: (1) Tax efficiency: Qualified dividend and capital gains treatment vs. ordinary income. (2) Alignment: We eat our own cooking. If NOI grows, we benefit. If it shrinks, we share the pain. (3) Wealth accumulation: Spot Origin builds a compounding portfolio of income-producing assets, not a fee stream that disappears if we stop originating. This is how we build a $100B+ enterprise—by owning yield, not billing for services.
We believe in transparency. Here is the complete fee stack from a tenant's perspective:
| Line Item | % of Gross Rent | Notes |
|---|---|---|
| Gross Rent Collected | 100% | Starting point |
| Operating Expenses | -40% | Maintenance, insurance, taxes, utilities |
| Net Operating Income (NOI) | 60% | |
| Spot Origin (15% of NOI as yield strips) | -9% | Accountability layer, tax-advantaged |
| Developer (5% of NOI) | -3% | Perpetual alignment |
| Net to Yield Strip Holders | 48% | ~80% of NOI |
On a building with $2.5M gross rent, yield strip holders receive approximately $1.2M annually. On a $30M property, this represents roughly a 4% cash yield before growth. With 3% annual NOI growth, total return approaches 7-8%—competitive with core real estate, with better liquidity and lower entry barriers.
The 15% allocation is meaningful. We do not hide this. It is justified by the accountability layer we provide—and because we take it as yield strips rather than fees, our interests are permanently aligned with every other holder.
Banks don't want to manage buildings. Pensions don't want to manage buildings. Developers don't want to manage buildings.
But someone must. Someone must hold the deed. Someone must hire and fire property managers. Someone must ensure the yield gets delivered.
Property managers are a risk element, not custodians. They need oversight. They need accountability. They need someone watching.
Spot Origin is that someone. We exist so that everyone else can do what they're good at:
We are the connective tissue between liabilities and new development. The manager of managers. The custodian of the yield strip's performance.
The U.S. multifamily lending market represents $326 billion in annual volume. Construction lending has collapsed. The capital stack is broken. The vacuum is documented and persistent.
Spot Origin requires only modest market share to build a significant business:
| Year | Market Share | AUM | Annual Revenue |
|---|---|---|---|
| 1 | 0.10% | $0.3B | $3M |
| 5 | 1.00% | $8.5B | $85M |
| 10 | 2.25% | $37B | $380M |
| 15 | 3.50% | $86B | $920M |
Because buildings don't churn, and NOI grows annually, revenue compounds twice: from new assets and from organic growth on existing assets. And because Spot Origin takes its compensation as yield strips rather than fees, we're building a permanent portfolio—not a service business dependent on continuous origination.
Spot Origin's structure is designed for regulatory clarity. We use established instruments and well-understood pathways—no novel legal theories, no regulatory arbitrage.
Each building is held in a separate LLC with its own associated fund. This provides clean bankruptcy remoteness, clear accounting, and allows tenants to own equity in their specific building rather than a diversified pool.
The "yield strip" is structured as perpetual preferred equity in each building's fund. This instrument provides:
Each building fund offers two tranches with identical economics but different regulatory wrappers:
| Tranche | Investors | Regulatory Path | Annual Limit |
|---|---|---|---|
| 144A | QIBs / Institutional Investors | SEC Exempt (Rule 144A) | Unlimited |
| Reg A+ | Tenants / Retail Investors | SEC Qualified (Tier 2) | $75M per issuer/year |
Same building. Same NOI. Same economics. Different access points.
Spot Origin does not operate an Alternative Trading System (ATS) or exchange. Instead, we use an interval fund structure:
This is a well-established structure used by many private real estate funds. No novel regulatory interpretation required.
Tenants who wish to finance their yield strip purchases will work with partner lenders (potentially including Fifth Third Bank). The loan is secured against the income-producing yield strips themselves. This may require partnership with a licensed broker-dealer for distribution. Further legal analysis is pending.
Spot Origin will be built in phases. We are honest about what is achievable near-term versus what requires years of development.
The tenant ownership vision is the end state, not the launch product. Institutional infrastructure comes first.
We believe in honest assessment of what could go wrong.
These are real risks. We are pre-revenue, pre-track-record, and pre-regulatory-clarity. The conditional term sheet approach exists precisely because we acknowledge this reality. We are asking for the opportunity to prove the model, not blind faith.
Spot Origin is infrastructure. Not an app. Not a feature. Infrastructure.
We connect pension capital to developers through forward purchase agreements. We separate the deed from the yield so ownership can exist unencumbered. Over time, we will provide quarterly liquidity through tenant participation and enable income-driven ownership for renters who have never had a path into the housing wealth ladder.
Where we are today: Pre-revenue. Pre-track-record. Seeking a strategic partner to prove the institutional mechanism before layering in tenant access. We are honest about what is proven (nothing yet) and what is theoretical (most of it). The conditional term sheet approach reflects this reality—we are asking for the opportunity to prove the model, not blind faith.
The construction capital stack is broken. We're fixing it.
Renters can't build wealth. We're changing that.
The first rung of ownership is too high. We're lowering it.
And when ownership becomes the amenity, we don't just fill buildings—we create communities where tenants stay, care, and pay a premium for the privilege of building wealth where they live.
The question we ask everyone—developers, pensions, tenants—is the same: