|Current Ann. Return||6.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||6.0%|
|Accrued Ann. Return||+ 8.5%|
|Gross Ann. Return*||14.5%|
|Term Remaining||6 of 24 mo.|
|Underlying Security||Preferred Equity|
This is an opportunity to invest in the development and construction of a 40-unit brand new residential condominium project located in the Koreatown neighborhood of Los Angeles.
The Harvard Residences will be a luxury six-story project with two stories of parking, a gym, recreation room, and central courtyard. The units will have central climate control, hardwood flooring, tankless water heaters, Italian Kitchen cabinets and Frigidaire Gallery appliances with in-unit washer/dryer. The sponsors (Index Real Estate and Ketter Construction) purchased the site fully entitled, recently received all their required permits and have already broken ground having closed on a construction loan with EverTrust Bank in the amount of $11,800,000.
The projected is expected to take roughly 14 months to complete with the delivery of the units for sale in the 3rd Qtr of 2016. The sponsor has projected an average sales price of $550,000 a unit which is approximately $473/SF. Recent sales of comparable condo units the the market have sold on average from $450/SF up to $500/SF.
The Los Angeles market as a whole has seen rapid price increases for new homes and condos due primarily to a lack of supply. Home sale prices in the LA have grown on average between 15-20% over the last 12 months. The Koreatown sub-market specifically has become one of the most popular neighborhoods in the city, particularly with the young “hip” crowd. The surrounding area has a number of quality amenities including a grocery store, shopping mall, and many popular restaurants and bars. With a current lack of supply of for-sale housing the in the area along with projected population growth of 4.5% annually, the area should continue to see significant growth in demand for new residential housing which in turn should continue to drive up sales prices.
Based on a conservative scenario where the average sale price of the units is $440/SF, only 28 of the 40 units would need to sell in order for the Fundrise investment to be paid back.
This investment is projected to pay a 14.5% (6% current + 8.5% accrued) gross annual return over the 24 month investment period.
Koreatown is Los Angeles's densest neighborhood with residential vacancy under 2%. The area is projected to have 4.5% population growth projected by 2019, which is anticipated to result in continued significant residential demand for new homes and condos and increased sales prices.
The sponsors purchased the land fully entitled and have already begun initial construction having closed on their primary loan with the bank.
The sponsor funded a two year interest reserve at closing which will be used to pay the current preferred return during the construction prior to the proceeds from the sale of the units.
In a conservative scenario where the sales prices for units ended up 5-10% below the projections, only 28 of the 40 units would need to sell for the entire Fundrise Investment to be paid back.
|Gross Annual Return*||14.5%|
|Capital Senior to Fundrise||70-79%||4|
|Capital Junior to Fundrise||10-19%||4|
|Sponsor’s Track Record||Less than $50 million||3|
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||19.0%||$3,042,490|
|Preferred Equity||Fundrise Investment||7.5%||$1,200,000|
The Harvard Residences (the Project) consists of a six-story wood frame structure containing 40 residential condominium units, making up 45,924 SF of living space, two stories of parking (Type I Construction). The Project consists of two and three bedroom units ranging from 1015 SF to 1252 SF with an average unit size of 1161 SF.
The first floor above the garage will feature 10 flats, a gym, recreation room and central courtyard. The second floor will have 10 flats and two central decks and the third and fourth floors will have 10 flats per floor. All units will have balconies and the 16 corner units (Plans A, AR, D & DR) will have two balconies each. The units will have central climate control, hardwood flooring, tankless water heaters, Italian Kitchen cabinets and Frigidaire Gallery appliances (refrigerator, dishwasher, microwave and range) and in-unit washer/dryer (side by side).
|Address||1101 S. Harvard Blvd NW|
|City & State||Los Angeles, CA|
|Product Type||Residential / Condominiums|
|Project Phase||Ground-Up / Construction|
The Koreatown submarket is an up and coming area just west of the downtown of Los Angeles that has a large amount of restaurants and retail. Koreatown is one of the most popular and hip neighborhoods in Los Angeles. Following the 1992 riots, the neighborhood was burned out and suffered significantly as a result. The neighborhood did not start to turn around until the late 90s when Korean investors started buying property as a way to protect cash investments during the Asian Financial Crisis. Since then, the neighborhood continued to grow.
Today, Koreatown is the densest neighborhood in Los Angeles and draws visitors and new residents alike. According to the a Feburary 2015 article in the New York Times, “Today this sprawling, three-square-mile community just west of downtown has become one of the city’s hippest areas thanks to the continuing renovation of its rich architectural heritage, a new subway traversing its Wilshire Boulevard hub and recently opened boutique hotels like the Line and Normandie. Moreover, K-Town never sleeps, given its strong Asian and Latin work ethic and its clubs, bars and restaurants that have become urban night-life hubs.”
Partnership OverviewView full profile
|Gross ann. return*||14.5%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||14.0%|