|Current Ann. Return||15.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||15.0%|
|Accrued Ann. Return||+ 0.0%|
|Gross Ann. Return*||15.0%|
|Term Remaining||0 of 12 mo.|
|Underlying Security||Preferred Equity|
This is an opportunity to invest in a series of Notes tied to a preferred equity investment in the acquisition and pre-development of a two phase 55-unit condominium development located in DC’s Capitol Riverfront District. Sponsor James Anderson, Manager of 818 Potomac Avenue SE, LLC, closed on the acquisition of the property in March 2015 and is currently in the pre-development process.
The preferred equity investment from Fundrise is being used for the remaining pre-development, and is expected to be paid back within 12 months via a new senior construction loan.
This investment is projected to pay investors an annual gross return of 15% paid all current on a quarterly basis.
The project consists of two adjoining properties: 816 Potomac Ave – an existing roughly 15,000 SF historic property and 820 Potomac Ave – a 7,163 SF parking lot. The sponsor is planning to develop the project over two phases. Phase I will include the renovation of the property located on 816 Potomac Ave into 14 units. Phase II will be the new ground-up development of 820 Potomac Ave into 41 units.
Milestones & Exit Strategy: The sponsor closed on the acquisition in March 2015 at a purchase price of $3,730,000 and anticipates the following two phase development timeline:
Neighborhood: The Capitol Riverfront area of Capitol Hill, in Southeast Washington, DC, benefits from its proximity to Barracks Row’s increasingly vibrant social scene, Nationals Park, and Washington Navy Yard. Largely overlooked during the recent wave of revitalization in many DC neighborhoods, the immediate area is now poised for growth and features attractive land prices in an otherwise expensive DC market.
Permitting and Entitlements: The Phase I renovation features by right zoning, and requires Historic Preservation Review Board (“HPRB”) approval, a building permit, a public space permit, and Public Space Committee approval. Phase II will require zoning relief from the Board of Zoning Adjustment on the following items: the car elevator, exceeding the lot coverage ratio by 2%, retaining the circular drive, the varying roof structure heights, and roof structure setbacks. Additionally, the sponsor will seek approval to amend an existing zoning order that requires 820 Potomac Ave. to provide 13 parking spaces to the owners of 810 Potomac Avenue. Phase II will also require HPRB approval, building permits, and public space approvals.
Total acquisition costs were $4,179,100. The sponsor projects total project costs of $20,727,069 and total condo sales of $25,970,000 ($472,182/home or $623/SF).
Payments: Interest payments on this series of notes will be as follows:
|Gross Annual Return*||15.0%|
|Capital Senior to Fundrise||50-59%||2|
|Capital Junior to Fundrise||10-19%||4|
|Sponsor’s Track Record||$50-249 million||2|
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|
|Equity||Sponsor and LPs||14.3%||$597,690|
|Preferred Equity||Fundrise Investment||32.8%||$1,371,000|
As-Is – 816 Potomac Avenue SE is an elegant, 4-story, 15,000 SF historic building constructed in 1945 and presently vacant. The yellow brick building sits over 60 feet from the Avenue on a 6,985 SF lot, behind a beautiful, mature maple tree, and is served by a gracious circular drive. The building has a full basement, with large window wells and two exits to the street, in addition to the central stairway, which has a skylight that is the entire size of the stairwell. The flat roof lends itself well to the proposed roof deck.
Immediately adjacent to the building is 820 Potomac Avenue, which currently is used as a parking lot. It is a corner site, bounded by Potomac Ave to the south, 9th Street, to the east, and L Street to the north, lending it excellent visibility and access. The lot measures 7,163 SF.
Both 816 and 820 are within the Capitol Hill Historic District, the Anacostia Waterfront Development Zone, and the 8th Street Neighborhood Commercial Overlay District. They are zoned C-3-A. The NC Overlay requires 50% of the first floor space of 820 to be retail – a provision from which the sponsor intend to seek zoning relief.
The properties will yield 14 condominiums in 816 Potomac Avenue and 41 condominiums in an entirely new, 4-story, 40,100 SF building above 36 underground parking spaces.
Upon completion of both additions, the finished building will consist of 26 one-bedroom units averaging 600 SF, 26 two-bedroom units averaging 903 SF, two three-bedroom units at 1,188 SF, and one studio, to be made available for rent as a guest suite, of 343 SF. The Eric Colbert-designed building will be painted brick with faux granite accent panels. It will include three basic unit designs: Seven first floor duplexes with direct outside access, in a style similar to that of the rowhouses Capitol Hill is known for, though in this case with underground parking and amenities; two floors of typical flats; and, the top floor with penthouse-sized units with balconies and floor to ceiling glass in the additions.
Finishes will include quartz counter tops, Kitchen Aid Architect Series II stainless steel appliances, soft-close cabinets, gas ranges, Nest thermostats, hardwood floors, polished chrome hardware, contemporary fixtures, and recessed lighting. In addition to the drive-in, drive-out car elevator to the 36 underground parking spaces, amenities include 38 bicycle spaces, storage, 24-hour car service, passenger elevator, roof deck with outdoor kitchen and grill, green roof, dog/car washing facility, security cameras, video intercom, guest suite, and package delivery room. Additionally, every one of the 55 units will come with a one-year free membership to the luxurious, new 30,000 SF Vida Fitness Club with rooftop Penthouse Pool and Lounge, Aura Spa, Bang Salon, Fuel Bar, Gear Shop, and underground parking, four blocks from the property.
|Address||818 Potomac Ave|
|City & State||Washington, DC|
|Product Type||Residential / Multi-Family|
|Project Phase||Ground-Up / Pre-Development|
Washington, DC, the seat of the Federal government, covers an area of nearly 69 square miles located between Virginia and Maryland at the confluence of the Potomac and Anacostia Rivers 25 miles west of the Chesapeake Bay. Recognized as one of the most beautifully designed and distinguished cities in the world, Washington has witnessed a cultural resurgence in recent years as several historic neighborhoods including the U Street Corridor, 14th Street/Columbia Heights, Barracks Row, and NOMA, have undergone economic revitalization and development.
Capitol Riverfront District
816, 820 Potomac Avenue SE is located two blocks south of the restaurant and retail destination that is Barracks Row, home to the United States Marine Barracks. The Barracks is home to many nationally recognized units. It is also the site of the Home of the Commandants, which, along with the Barracks, is a registered national historic landmark. Numerous top restaurants help make Barracks Row the vibrant social scene that it is, including Roses Luxury, recently named by Bon Appétit Magazine as one of America’s Top 50 Restaurants. Other popular establishments are Zest, Matchbox, Ted’s Bulletin, and District Donut. At the northern end of Barracks Row is the Eastern Market Metrorail Station (Blue, Orange Lines) only six blocks from the properties.
To the west is the mixed-use community surrounding the Nationals Ball Park, and immediately to the south is the Washington Navy Yard and the Potomac River. The Capitol Riverfront District is rich with amenities and proximate to public transportation. The new Harris Teeter grocery store and Starbucks is four blocks west of the properties, and shares the underground parking garage with Vida Fitness. Four blocks further west is the Navy Yard Metrorail Station (Green Line). Restaurants include Osteria Morini, by New York City’s award-winning chef, Michael White, Aqua 301, and Gordon Biersch. Popular casual dining spots include Sweetgreen, Bluejacket Brewery, TaKorean, Nando’s Peri Peri, and Kruba Thai and Sushi. Also, the extremely popular Biergarten, with indoor and outdoor seating for 295, is opening a second location one block from the properties. More than 30 other restaurants are in the neighborhood.
The units will be delivered into a market in which “there are simply too few units available,” according to the First Quarter 2014 Washington/Baltimore Condominium Market Report of Delta Associates, one of the region’s leading real estate market analysis organizations. Delta Associates also notes that this condominium shortage has “fueled the strongest annual new condo price increase in the metro (DC) area since 2005.” The Capitol Riverfront area of Capitol Hill, in Southeast Washington, DC, displays numerous supply and demand characteristics which make it ideally positioned to benefit from the larger market trend.
Per Redfin, in the 20003 ZIP code, which includes all of Capitol Hill east of South Capitol Street and south of East Capitol Street, in March, and again in May, the total number of sold condominiums in this submarket was less than 10, all of which were resales. For each three-month period for nearly two years, the number of condominium sales in this submarket has been in the single digits. And a July 2014 Real Estate Business Intelligence report, using Metropolitan Region Information Systems data, shows DC condominium prices increasing 5.1 percent in the last 12 months, and for all home sales in DC, “prices have now risen year-over-year for the 28th month in a row.” REBI’s December report shows an increase of 6 percent in condo prices over the previous year.
818 Potomac Avenue SE, LLC is managed by James Anderson, a DC-based developer with Capitol Hill offices only five blocks from the site. James was a founding partner of NOVO Development Corporation, which owns and manages a portfolio valued in excess of $150M, with over 1,800 apartment units in Washington, DC, Chicago, IL, Philadelphia, PA, Charleston, SC and Cambridge, MD.View full profile
|Gross ann. return*||15.0%|
|Servicing and administration fee||-0.3%|
|Net ann. return to investors||14.7%|
|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|