|Current Ann. Return||12.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||12.0%|
|Accrued Ann. Return||+ 0.0%|
|Gross Ann. Return*||12.0%|
|Term Remaining||0 of 36 mo.|
|Underlying Security||Preferred Equity|
This is an opportunity to invest in a brand new Class A 111-unit boutique apartment building, The Søren, located in the heart of Seattle’s Ballard neighborhood. The project, which opened to new move-ins in May 2015, is now over 46% leased as of June 2015. The sponsor, Pryde+Johnson, used the proceeds from the Fundrise investment to cash out a portion of their initial $10 million equity contribution in the project, and plan to use the proceeds in a new multifamily development.
The Soren property is now valued at approximately $44 million based on a cap rate of 4.75% (supported by a number of recent sales of comparable properties) and a projected stabilized NOI of just over $2 million. Based on this valuation, the Fundrise investment is lowly levered at an LTV of 57.3%. In addition, based on the sponsor’s projected as-stabilized NOI of approximately $2 million, the debt-service-coverage-ratio for the payments required on the senior loan + the Fundrise investment is 1.22x, in other words the net operating income from rent would have to drop by close to 20% before the payments on the Fundrise investment would be negatively impacted.
Seattle as a market continues to be one of the top five strongest cities in the country for multifamily investment. Although there has been a significant number of new projects delivered in the past few years, this supply is matched by the continued growth of new renters, which is supported in large part from the number of companies with their headquarters in Seattle including Microsoft, Amazon, Alibaba, Starbucks, Boeing, and Costco.
Milestones & Exit Strategy: The sponsor delivered the project in May 2015 at a total cost of $33,200,000 and anticipates the following timeline:
Neighborhood: The Soren Apartments are located two blocks north of NW Market Street (the main arterial) on the west side of 24th Avenue NW (a north-south collector with two lane in each direction) at 5711 24th Avenue NW. This is in the heart of the trendy Ballard neighborhood, one of Seattle’s most popular and dense neighborhoods. The location is clearly favored by institutional owners: Equity Residential, Avalon Bay, Amli and Blackrock all own large new apartment properties within a few blocks of the subject property. The neighborhood is well served by Metro’s RapidRide bus service that provides 24/7 access throughout the region.
This investment is projected to pay a 12% (all current) gross annual return over the 36 month term.
The Fundrise investment represents an LTC of 77.4% on the total project cost of $33.2M, with $7.5M of hard equity junior to the Fundrise position. The investment features an LTV of 57.3% on the sponsor’s as-stabilized value projection of $44,876,505.
The project would have to under perform by more than 20% before the Fundrise investment would be negatively impacted
The Soren is a brand new Class-A property. It's located in the Ballard submarket of Seattle, one of the hottest neighborhoods in one of the top five strongest cities for multifamily investment. Ballard has unmatched "coolness" and cache with a concentration of authentic and boutique retail, walkability, and a great neighborhood setting within relative proximity to Seattle’s urban core. It is an area favored by institutional owners. Equity Residential, Avalon Bay, Amli, and Blackrock all own properties within a few blocks of the subject.
The quality of the project combined with the location create a strong likelihood that the asset performs well in terms of it's ability to lease quickly and meet projected rent expectations.
Pryde+Johnson has decades of experience developing in the core Seattle submarkets. The sponsor is beginning construction on a similar 106-unit project (the Keelson Apartments) a few blocks away in June 2015.
The sponsor invested approximately $10 million of their own personal capital into the development of Soren and with the Fundrise investment in place will retain more than $7 million of cash equity in the asset, junior to the Fundrise investment.
|Gross Annual Return*||12.0%|
|Capital Senior to Fundrise||60-69%||3|
|Capital Junior to Fundrise||20-29%||3|
|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|
|Preferred Equity||Fundrise Investment||8.4%||$2,800,000|
|General Contractor Takeout||3.3%||$1,100,000|
The subject property consists of a single eight-story podium-style building. The project contains a total of 111 multifamily units plus 5,320 SF of ground-floor commercial space.
Unit Mix (prices are sponsor projections):
The sponsor has purposely positioned the project in and around the competition’s unit types, mix, and sizes to create a product that both maximizes the economics on a per-square-foot basis, and also gives a competitive advantage from a marketability standpoint. The sponsor’s research of the competing properties helped them to design a product that will fill a void and will meet needs that aren’t being satisfied. For example, EQR’s Urbana nearby has studios but no open one-bedrooms. The subject property has no studios but will have open ones that are slightly larger (25 to 50 SF) than the studios, but also provide a bedroom than can be separate from the living/ kitchen area.
The six residential levels have 2x6 exterior wood-frame construction. The construction was done to condominium standard specifications including extensive soundproofing. The standard build-out is above average of the quality levels in the current market. Two levels of subterranean parking were constructed of poured in place with concrete columns, beams and tensioned concrete decks. Full height floor-to-ceiling casement style windows to maximize passive thermal heat and cooling as well as maximize the view amenity of the Olympic mountains to the west and the Ship Canal to the south.
Walls are clad with a combination of metal, cement, and very durable and long-lasting wood material. The lobby contains two traction style elevators (high-rise) along with two sets of stairwells. The roof is flat multi-ply with rooftop deck consisting of concrete pavers, open space and green roof heavily planted with a combination of grasses, shrubs, trees, herbs, flowers, and vegetables. The 4,000 SF roof deck is full of amenities, including: a covered barbeque seating/gathering area along with dog run, dog wash area, fire place, outdoor fire pit and “piddle patch.” Bicycle storage and parking are provided.
Residential units have a combination of electric fan forced air units and baseboard heat. Plumbing used includes low flow showerheads and faucets to reduce water use by approximately 30%; saving both water and heating energy. Energy Star stainless appliance packages with refrigerator, range, dishwasher, and full sized stacked washer/dryer sets (select have side-by-side). Surfaces are granite countertops with six-inch full tile backsplash, hardwood floor finish through the units, and natural linoleum products or ceramic tile in bathroom areas. Bath surrounds are one-piece fiberglass with seat. Cabinets are formaldehyde-free thermofoil cabinets; stainless steel kitchen sink with pullout Moen or Delta faucet. Walls are textured and painted with painted wood millwork. Light fixtures are installed in the baths, entry and dining area and include Energy Star LED surface mount track lighting.
The project was built to LEED Silver standards. Green building features include the following:
|Address||5711 24th Ave NW|
|City & State||Seattle, WA|
|Product Type||Residential / Multifamily|
|Project Phase||Stabilized / Recapitalization|
Seattle is the largest city in the Pacific Northwest and one of the fastest-growing cities in the United States. The cultural and business center of the region, Seattle and its surrounding areas are the home to Boeing’s aircraft assembly plants, Microsoft, Amazon.com, Costco, Nintendo of America, Starbucks, and the University of Washington, as well as a vibrant arts scene and an excellent park system. Seattle added nearly 50,000 to the MSA in each of the past four years with additional employment gains forecast well into the future driving continued demographic growth.
The Seattle market continues to rank in the top five national investment markets in several asset classes. Long term, the multifamily sector’s expansion is limited by available land, a major reason that investors with longer hold horizons rank the region highly.
The ongoing favorable market performance in the apartment sector has been attributed to several demand factors including:
These factors point toward continued demand for apartment units over the next few years, especially better quality apartments, as renters are looking at longer stays, justifying a flight to quality. The likely outcome is increased demand for rental housing. In addition, there will likely be some loss of apartment inventory as conversions of newer or planned apartments to condominiums will eventually provide entry level units as the for sale market continues to recover.
The Ballard location is within one of the strongest submarkets in Seattle. It has unmatched "coolness" and cache with a concentration of authentic and boutique retail, walkability, and a great neighborhood setting within relative proximity to Seattle’s urban core. The Soren Apartments are located two blocks north of NW Market Street (the main arterial) on the west side of 24th Avenue NW (a north-south collector with two lane in each direction) at 5711 24th Avenue NW. Ballard is known as a center for fresh farm-to-table restaurants by nationally acclaimed chefs in addition to the numerous bars, clubs, and shopping. There is a QFC (Kroger) grocery across the street, a Bartells drug store (a regional chain) a block away, and a wide range of shops and restaurants on Market Street.
Pryde+Johnson is a second-generation privately owned developer and builder with more than 25 years of experience in the Seattle market. The Pryde + Johnson’s team has extensive experience in multifamily developments, including over 21 apartment communities and condominium projects.View full profile
|Gross ann. return*||12.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||11.5%|
|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|