|Current Ann. Return||11.4%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||11.4%|
|Accrued Ann. Return||–|
|Gross Ann. Return*||11.4%|
|Term Remaining||– of –|
ACCRE Sponsor Equity Fund, LP ("ACCRE"), in partnership with a local real estate developer/operator, currently is under contract to purchase its second deal under the ACCRE platform. Our local partner has deep roots in the Research Triangle area. The property consists of two contiguous office buildings connected on each of three levels by an enclosed sky bridge. The property also includes a 291-space parking garage that is connected to the northernmost building by a sky bridge. The property contains 100,634 rentable square feet and 70 feet of retail frontage along East Franklin Street, a main retail and business corridor in Chapel Hill. The parking garage provides a parking ratio in excess of 3 spaces per 1,000 square feet of office space.
Credit tenants occupy 76% of the building's gross leasable area. Total annual rental revenue derived from such credit tenants covers annual debt service 1.56 times. The State of North Carolina, through the University of North Carolina at Chapel Hill and UNC Healthcare System (collectively, "UNC"), occupies nearly 60% of the building. The University of North Carolina at Chapel Hill's 30,000 students walk into and out of campus through a passageway directly across Franklin Street from the property across a signalized intersection. UNC has a long history of occupancy in the building, having occupied space there for over 30 years. The University has expressed that, for its needs, the property is ideally located, signaling a desire to continue to maintain a high level of occupancy in the property. The State of North Carolina is rated AAA by S&P and Fitch, and Aaa by Moody's.
CVS occupies 17% of gross leasable area and is rated BBB+ by S&P and Baa1 by Moody's. This CVS location is a well-positioned amenity for UNC student residents, serving as a single convenient location to purchase groceries, snacks, as well as general household products. CVS signed a 20-year lease in 2013.
The property will be purchased at an 8.0% cap rate (based on in-place net operating income), which represents an attractive entry price. Certain of the office interiors and common areas are dated and in need of cosmetic upgrades. Performing these targeted upgrades in currently vacant spaces as well as those that are due to turn over in the near term will allow new ownership to add value through rental rate increases and extended average lease terms. Improved management efficiency will produce enhancements to the bottom line.
We have identified certain projects that we plan to complete in the immediate term and that should make the building an even more desirable location for office tenants. Such capital improvements include lighting modernization, fully modernizing the elevator equipment and cabs, targeted HVAC upgrades, and installing modern fire protection and life safety systems. Depending on the leasing market in downtown Chapel Hill, there is potential to create further value by investing in the replacement or covering of the building faï¿½ade, and/or reconfiguring the retail facing Rosemary Street.
|Capital Senior to Fundrise||50-59%||2|
|Capital Junior to Fundrise||10-19%||4|
|Sponsor’s Track Record||$250 million or more||1|
The information contained in the Fundrise Rating is for informational purposes only. It is impersonal and not individualized for any specific investor's financial situation and is not investment advice. These ratings are not intended to be, nor should you interpret them to be, a prediction of how a particular investment will actually perform. You should always carefully consider investments in any security and be comfortable with your understanding of the investment. You may also consider consulting investment professionals.
|Type||Source||% of Total||Amount|
|GP Equity||Sponsor & Local Partner||11.4%||$3,481,000|
|LP Equity||Private Investors||24.9%||$7,572,000|
|LP Equity||Fundrise Offering||2.6%||$790,000|
Typical of ACCRE's investment strategy, this transaction will include a local partner who is co-invested in the deal and is primarily responsible for the daily on the ground operations of the property. In this particular case, the local partner will play a larger than normal based on their significant market knowledge and relationships, as well as having off-market sourced the transaction.
The value-add opportunity of this deal consists of leasing current vacant space, renewing UNC leases at higher rents and longer lease term, and undertaking needed cosmetic and mechanical upgrades to the property. A portion of UNC's leases expire in 2015 and we have already had meaningful conversations with UNC regarding extending these leases. UNC has expressed a desire to remain in the building, subject only to the new owner's making cosmetic and infrastructure upgrades that are part of our business plan for the asset. Following the implementation of these improvements, we anticipate the ability to increase the rental rate of spaces that are turning over.
We also believe that improved management efficiency will produce enhancements to the bottom line. Depending on the leasing market in downtown Chapel Hill, there is potential to create further value by investing in capital improvements, such as elevator cabs, replacing or covering the building facade and/or reconfiguring the retail facing Rosemary Street. We have identified and prioritized all capital improvements projects and will undertake those that add value to the property.
We anticipate holding the investment for a period of 5 years, at which time a capital event in the form of a refinancing or sale will occur.
|Address||137 East Franklin Street|
|City & State||Chapel Hill, NC|
|Neighborhood||Adjacent to UNC|
|Product Type||Mixed-Use / Office/Retail|
|Project Phase||Stabilized / 94% Occupied|
Founded in 1959, Research Triangle Park (RTP) is the largest research park in the world, located in the Triangle Region of NC, which includes Raleigh, Durham, and Chapel Hill. With close proximity to top-ranked Universities (Duke, UNC, and NCSU), RTP serves as one of the most prominent high-tech research and development centers in the United States and is currently home to over 170 companies employing approximately 42,000 workers and 10,000 contractors. Some of the more prominent companies and governmental research facilities situated within RTP include IBM, Cisco, NetApp, Syngenta, and GlaxoSmithKline.
Situated in the heart of North Carolina, Chapel Hill is a progressive college town rich in history, tradition, and opportunity. Also home to UNC Health Care, Chapel Hill maintains an approximate 57,233 population and serves as one of the three corners or the Research Triangle, along with nearby Raleigh and Durham. Combined population for the Raleigh, Durham, and Chapel Hill area totals approximately 1.9M. Originally founded to serve The University of North Carolina (30,000 students), the Town of Chapel Hill has developed into a vibrant community renowned for its commitment to public service, cultural enrichment through the arts, academia, and medical research.
UNC Health Care
Owned by the State of North Carolina and headquartered in Chapel
Hill, the UNC Healthcare System is a not-for-profit fully integrated
healthcare system directly affiliated with the acclaimed UNC-Chapel Hill
School of Medicine. With an annual budget of $969.5M, the UNC Health
Care System is home to 7,215 fulltime employees, 1,091 attending
physicians, 763 residents, and occupies 2.1M square feet of leased and
owned floor space.
Situated on East Franklin Street directly across from the entrance to the University of North Carolina at Chapel Hill, the property enjoys a crosswalk and traffic signal in front of its own entrance, giving easy access to the University campus for the building's University tenants. Additionally, one of the main Research Triangle bus stop hubs is located directly in front of the building. East Franklin Street is comprised of a variety of national and local retailers and the center of gravity for dining and recreation in this college town.
Real estate defines the communities in which we live, work, and play, and ATCO invests in projects that will yield positive community returns, as well as build value for our investors. We view the future of America as taking place in the downtowns of our cities, and we see overlooked opportunities in the downtowns of America's smaller, growing cities, places such as Austin, TX; Nashville, TN; Indianapolis, IN; and Charlotte, NC.View full profile
|Gross Ann. Return*||14.0%|
|Term Remaining||0 mo.|
|Underlying Security||Senior Debt|
|Gross Ann. Return*||11.0%|
|Term Remaining||0 mo.|
|Underlying Security||Senior Debt|