|Current Ann. Return||14.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||14.0%|
|Accrued Ann. Return||+ 0.0%|
|Gross Ann. Return*||14.0%|
|Term Remaining||19 of 36 mo.|
|Underlying Security||Preferred Equity|
This is an opportunity to invest in the development of a brand new Class-A 158-unit luxury apartment building, the Bonneville, located in the Central City neighborhood of Salt Lake City, Utah. The sponsor, JF Capital, recently delivered two similar multifamily properties, the 122-unit CityScape and the 61-unit Newhouse, in the same neighborhood and successfully exited both through a sale of each property upon stabilization.
The greater Salt Lake City metro area is currently one of the strongest performing MSAs in the country. The US Chamber of Commerce rated Utah as the #3 state in overall economic performance at the end of 2014 and Forbes listed it as the #1 place for business. This growth has largely been driven by companies like Adobe, Twitter, Electronic Arts and Goldman Sachs, along with both public and private investment in education and new infrastructure (Google Fiber) along with business friendly policies.
The growing demand for a highly-skilled and technical work-force has resulted in steady demand for new housing, and specifically multifamily apartments. Occupancy rates for the market as a whole currently are around 96% with projected demand continuing to outpace new supply over the next 24-36 months. Within Salt Lake, Central City is one of the most attractive sub-markets located directly in between the central business district and the University of Utah. This location caters to both young professionals who work downtown as well as students who favor fast commutes to campus.
The sponsor’s budget anticipates a total project cost of roughly $27.8M. This will be funded with a $19.3M construction loan + $2.5M of preferred equity from Fundrise + $6M of equity from the sponsor and limited partners.
The sponsor projects as-stabilized NOI of approximately $2M. At a 6.0% cap rate (current market projections), the completed project would be valued at more than $35M. Assuming an 80% loan-to-value during the refinance, the total amount of the new senior loan would be in excess of $28M.
Under these assumptions, the property would have to perform more than 20% below projections before the Fundrise investment was negatively impacted.
The investment is projected to pay a gross annual return of 14% All-Current over the 36 month term.
The greater Salt Lake City metro area is currently one of the strongest performing cities in the country; the US Chamber of Commerce rated Utah as the #3 State in overall economic performance at the end of 2014 and Forbes listed it as the #1 place for business. This growth has largely been driven by companies like Adobe, Twitter, Electronic Arts and Goldman Sachs creating a growing demand for a highly-skilled and technical work-force, which in turn has resulted in steady demand for new housing.
The Principals of JF Capital have collectively developed, constructed and acquired over $700 million of real estate assets since 2007, including residential, multi- family and seniors housing. JF Capital’s multi-family division has most recently developed three luxury apartment projects in the greater Salt Lake City metro area, representing nearly 600 units, and also has seven active apartment projects, representing nearly 900 units, in its current development pipeline.
The sponsor forecasts as-stabilized NOI in excess of $2M. Assuming a 6.0% exit cap rate and 80% LTV permanent loan, refinance proceeds yield a 1.30x takeout cover for the senior debt and Fundrise investment. In a downside scenario, sale proceeds yield a 1.62x takeout cover under sponsor projections. In other words, based on conservative assumptions the property would have to perform more than 20% below projections before the Fundrise investment was negatively impacted.
|Gross Annual Return*||14.0%|
|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||9.0%||$2,500,000|
The site is currently improved with a vacant 50-year-old, 29,537 SF one-story building that is to be razed to make way for the 158-unit Bonneville apartment building. The building will be six stories above grade, with an additional level below grade.
Unit Mix (prices are sponsor projections):
The property will feature the following community amenities:
The property will feature the following unit amenities:
|Address||252 South 500 East|
|City & State||Salt Lake City, UT|
|Product Type||Residential / Multifamily|
|Project Phase||Ground Up / Construction|
Garnering recognition as the crossroads of the West due to its central geography in the Western United States, the Salt Lake City metropolitan area is the political and economic center of Utah. With a current population of more than 1.1 million residents, the Salt Lake City metro area has gained national media attention as an economic hotspot given its productive workforce, dynamic economy, exceptional recreational opportunities and overall quality of life.
Downtown Salt Lake has seen transformative growth in recent years as the city endeavors to attract more Millennial residents. With companies like Adobe, Twitter, Electronic Arts and Goldman Sachs increasing their local employee head counts, Salt Lake City has quietly earned a reputation as a technology and finance-friendly metro area. In March 2015 Google announced it would be bringing its ultra-fast Internet and TV services, Google Fiber, to the city.
Per the third party appraisal:
“The long-term outlook for rental housing in Salt Lake County is strong. Utah continues to experience the nation's highest birth rate. The state has experienced net in-migration over the past several years. The unemployment rate is well below national averages. According to the American Legislative Exchange Council, Utah is ranked as the state with the best economic outlook.”
“Central City” Neighborhood
“Central City” is the neighborhood between downtown Salt Lake City and the University of Utah. Not too downtown and not too suburban, Central City is home to historical landmarks, haute couture, hip enclaves, and great restaurants. The neighborhood is characterized by a diverse mix of single-family residences as well as many historic and newer apartment buildings catering to young professionals who work downtown and students who favor fast commutes to campus. The main artery running through the neighborhood is 400 S. With numerous lanes of traffic, and service by TRAX (light rail), it makes for an easy commute no matter which end of the valley one is headed.
The property is located across the street from trendy restaurants like Rye Diner & Drinks and popular music venue Urban Lounge. The trolley, which provides direct access to downtown, is an 8-minute walk from the site. Downtown Salt Lake is just over 1 mile from the property along 300 S.
JF Capital is a boutique real estate investment management firm dedicated to delivering superior, risk-adjusted returns to its clients and investors. JF Capital’s success is demonstrated by the $700 million of acquisitions and developments it has funded to date.View full profile
|Gross ann. return*||14.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||13.5%|