|Current Ann. Return||7.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||7.0%|
|Accrued Ann. Return||+ 6.0%|
|Gross Ann. Return*||13.0%|
|Term Remaining||20 of 36 mo.|
|Underlying Security||Preferred Equity|
This is an opportunity to invest in the acquisition of a 72k SF cash-flowing flex office & warehouse property located next to the Rhode Island Ave Metro Stop (Red Line) in Washington, DC. The property is currently 65% occupied by the WEDJ Charter School, which opened there more than 10 years ago.
The Sponsor, Mosaic Realty Partners (“Mosaic”), purchased the property for $14,200,000, an all-in basis of $197/SF (well below replacement cost). The property yields a 7.5% cap rate on the year 1 NOI of $1,076,000. The vacant space (roughly 25k SF) is in shell warehouse condition which leaves a variety of leasing options open. The projected stabilized NOI is $1,300,000 (an approximately 9% cap rate on the purchase price) once the entirety of the space is leased.
What happens if the Charter School vacates? ...Unlocking a development opportunity.
The property is located next to the Rhode Island Avenue Metro Station (Red Line), which is now directly accessible via a newly built pedestrian bridge over the train tracks. The property is only two stops from the heart of downtown DC (Union Station), directly in the path of growth from NoMA to the South and Logan Circle to the West, making it a prime candidate for redevelopment.
The site itself can currently support up to 257,000 buildable square feet of development for office, retail, or hotel. Similar transit oriented development sites located next to metro stops have recently sold for between $65-$85 per buildable square foot, which would support a value for the site of between $16,500,000 to $21,000,000.
In the event that the charter school were to vacate, the site's potential for redevelopment would increase the property's projected value by roughly 20-50% above the initial purchase price.
The sponsor plans to:
First, maximize the cash-flow through signing additional leases and stabilizing the current income in place. Second, explore re-entitlement options to allow for the development of residential multifamily on the site in the future.
In both scenarios, either through increased rent and/or entitling the property for redevelopment, the sponsor plans to increase the value of the asset allowing for multiple exit options through a sale or refinance of the property.
Currently, the Year 1 NOI of approximately $1,076,000 provides an aggregate Debt Service Coverage Ratio (DSCR) of 1.53x on the senior loan + Fundrise investment.
The investment is projected to pay a 13% gross annual return: 7% paid current and 6% accrued until maturity.
The property is located next to the Rhode Island Avenue Metro Station (Red Line), which is now accessible via a newly built pedestrian bridge over the train tracks. The property is only two stops from the heart of downtown DC (Union Station), directly in the path of development from NoMA to the South and Logan Circle to the West, making it a prime candidate for redevelopment.
The William E. Doar Jr. School (“WEDJ”) Charter School has occupied the Property for the last 10 years. WEDJ has expanded in the building four times and now occupies 48,744 square feet (65% of total space).
The sponsor’s purchase price is $55/SF FAR. The Fundrise basis is $46/SF FAR. At present, the land is zoned C-M-2, allowing 4.0 FAR for mixed-use, industrial, office, retail, and hotel use. Projected values for the land if it were available for development range from $65/SF to $85/SF of FAR.
|Gross Annual Return*||13.0%|
|Capital Senior to Fundrise||60-69%||3|
|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||16.5%||$2,350,000|
|Preferred Equity||Fundrise Investment||18.7%||$2,650,000|
The Property, originally constructed in 1949, is currently a charter school and raw office space/warehouse. According to the sponsor, the site was renovated in 2003 with $2.5M+ in base building improvements made by previous owner. Plus, the DC government invested $3.6M in renovations to make the building suitable for charter school use.
|Address||705 Edgewood St NE|
|City & State||Washington, DC|
|Neighborhood||Rhode Island Metro|
|Product Type||Industrial / School & Warehouse|
|Project Phase||Stabilized / 65% Occupied|
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.
The site is located in DC’s rapidly growing NE quadrant, and is served by the DC Metrorail’s Red Line Rhode Island Ave. metro stop, only two stops away from Union Station and the US Capitol. The property is located 500 feet from the metro entrance.
Recent neighborhood developments include:
Upcoming neighborhood developments include:
Washington, DC Close-In Industrial
The Washington, DC Close-in Industrial market is seeing a dramatic increase in absorption and rental rates. Within a 2.5 mile radius of New York Ave. and I-395 intersection, 54 buildings, 1.8M SF have been raised for new development. Asking rents are now averaging $13.91/SF within a 2.5-mile radius of Downtown DC for all industrial space on average (CoStar). Close-in industrial cap rates are averaging sub 5% for industrial properties with development options. Demand for studio, schools, breweries, galleries, gyms, etc. are pushing industrial uses out. This is especially true near rail stations.
Mosaic Realty Partners is a private real estate investment firm founded in 2012 by its principals, Isaac Pretter and Eron Sodie, for the primary purpose of investing in office, retail and industrial real estate in the Mid-Atlantic. Since inception, Mosaic has acquired 1.1 million square feet of commercial property with an investment value in excess of $100 million. Mosaic's principals have a combined 30 years' investment experience and throughout their careers have directed in excess of $5 billion into Mid-Atlantic real estate investments.View full profile
|Gross ann. return*||13.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||12.5%|