|Current Ann. Return||11.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||11.0%|
|Accrued Ann. Return||+ 0.0%|
|Gross Ann. Return*||11.0%|
|Term Remaining||0 of 18 mo.|
|Underlying Security||Senior Debt|
This is an opportunity to invest in the repositioning of a 3-unit apartment building in the Park Slope neighborhood of Brooklyn, New York. The sponsor, JBS Project Management, purchased the three story townhouse completely vacant and plans to renovate the property converting the existing structure into 3 separate luxury apartment units. The sponsor has completed several similar renovations in the area, including another townhouse renovation only a few blocks away, which has been fully renovated and is currently leasing.
Park Slope is one of the most attractive neighborhoods in Brooklyn and is experiencing rapid growth in home prices and average rental rates due to the large demand from young families and professionals seeking the combination of easy accessibility to Manhattan, along with beautiful brownstones and historic avenues filled with trendy boutiques, bars and restaurants.
The Fundrise investment of $2,000,000 is structured as a senior loan with a loan-to-cost (LTC) ratio of approximately 62% of the total project cost. The sponsor has contributed more than $1,225,000 of equity that will be junior to the Fundrise investment. The Fundrise investment features an attractive basis of $572/SF based on the total size of the property. Similar properties in the area sell for on average between $800/SF and $1,000/SF leaving a significant amount of value in the property above and beyond the Fundrise Investment. In other words, the average market value for the property would have to drop by more than 25% before the value of the Fundrise Investment would be negatively impacted.
This investment is projected to pay an 11% annual gross return (paid quarterly) over the 18 month term.
Fundrise’s last dollar basis is at $572/SF when market pricing for this type of property is at the lower end of comparables $800/SF, the average being closer to $925/SF, leaving the Fundrise investment a sizable amount of room for market price fluctuation. Additionally, the Fundrise investment is lowly levered at 62% of project cost.
The sponsor, JBS Project Management, funded over $1.2M of cash equity, more than 38% of the project’s capital, which is junior to the Fundrise position at closing.
An interest reserve of $200,000 is being held by Fundrise to pay the quarterly return to investors during the construction and lease-up period.
Park Slope is one of the most attractive neighborhoods in Brooklyn and will continue to see strong demand for housing. The subject property is located 1/2 mile away from a recently delivered Whole Foods grocery store and other various local and national retail stores. Additionally, the property is located approximately three blocks from the F, G, and R trains.
|Gross Annual Return*||11.0%|
|Capital Senior to Fundrise||0%||0|
|Capital Junior to Fundrise||30-39%||2|
|Sponsor’s Track Record||Less than $50 million||3|
|Secured by the Property||Yes||-1|
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||38.0%||$1,225,293|
|Senior Debt||Fundrise Investment||62.0%||$2,000,000|
Property: The subject property is a three-story, low-rise townhouse located on the South side of 7th Street between 4th and 5th Avenues in Park Slope, Brooklyn. The three-unit townhouse currently features three floor-through apartments totaling 3,494 square feet of rentable space.
The property is located in the heart of beautiful Park Slope and approximately three blocks from the 4th Avenue subway station (at 9th Street) where the F and G trains are accessible and only two blocks from the 9th Street station where the R train is accessible. The B63 bus which runs along 5th Avenue is also nearby.
Renovation Plans: The sponsor is planning a full interior renovation of the building. The sponsor has provided plans outlining the following improvements expected to be completed to the asset:
|Address||306 7th Street|
|City & State||Brooklyn, NY|
|Product Type||Residential / Multifamily|
|Project Phase||Value-Add / Reposition|
As the largest borough in New York City, Brooklyn's economy is growing rapidly, fostered by thriving tourism and robust job growth. According to a 2014 study conducted by the State of New York, between 2003 and 2012 the number of businesses in Brooklyn grew by 21%. Additionally, private sector employment grew by nearly 20%, almost twice that of the greater City of New York.
Brooklyn has continued to see significant rent growth from young professionals seeking an alternative to expensive rents in Manhattan. According to a June Douglas Elliman market report, the median rental price increased 5.9% year over year to the highest recorded level since January 2008. Per the report, “Brooklyn rents were higher than last year’s levels. Median rent set a new record high since we began tracking it seven years ago. The biggest rise in rent occurred in smaller apartments. The use of landlord concessions and negotiability was limited. We anticipate more of the same conditions over the coming months.”
JBS Project Management was formed out of a need in the marketplace for high quality, boutique project managers for select clients in and around New York City. JBS brings project management experience and skilled consultants to the table to provide the client with considerable expertise over a wide array of construction and development backgrounds.View full profile
|Gross ann. return*||11.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||10.5%|