|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||0 of 12 mo.|
|Underlying Security||Senior Debt|
We are pleased to provide the opportunity to invest in Kim King Associates LLC's acquisition of a 14,000 SF lot located in Midtown Atlanta next to Piedmont Park. The site is currently vacant and was purchased off market from a long-term holder. The sponsor had originally spoken to their traditional senior lender, but because of a tight acquisition timeline, approached us for certainty of close. This investment provides the opportunity to invest in a tight supply constrained and growing market at 72% of the purchase price (61% of total acqusition costs) with a personal guarantee from a strong sponsor. The sponsor will complete construction drawings and then seek to take Fundrise out within 12 months with a senior construction loan. The developer may also pay back principal in advance, as there is no prepayment penalty. Given Fundrise's high interest rate, it is a likely scenario that the investment could be repaid shortly after the 90 day pre-payment lockout expires.
The development project, which will be undertaken only after Fundrise is repaid, is currently anticipated to have 20 high-end condo units averaging 1,900 sf with sellout prices averaging $500 psf. The project is currently envisioned to have two floors of underground parking and provide a minimum of two spots for each unit. Views will be excellent with unparalleled views of Piedmont Park at the main entrance to the direct east, Ansley Park and Buckhead in the distant north, and the downtown skyline to the south. Although the site is zoned to allow 250 feet in height, the developers are capping themselves at less than half of that and planning to maximize the 51,000 sf site limit over eight floors for layout efficiencies.
Fundrise’s investment is secured by a personal guarantee from Kimbrough (Beau) King. Mr. King’s credit was underwritten, and it is the belief of Fundrise that his net worth and liquidity is sufficient to repay the loan should there be any issue with the development plan.
Interest payments on this series of notes will be tied to the distribution schedule under the terms of the senior debt investment as follows:
Fundrise’s true initial basis is $900,000 less the $126,000 interest reserve that is held in a Fundrise-controlled account, effectively lowering the exposure. Given the project's inability to cover debt service, Fundrise is able to lend the reserve up front and charge interest on the full principal, effectively increasing our exposure yield past 14%.
Kim King Associates will have one option to extend the loan for a six (6) month period at a rate of 16%.
The Midtown area is one of the strongest submarkets of Atlanta. There is low new condo supply and high professional job growth. 1 Block from W Hotel and proposed Whole Foods Development.
The sponsor is purchasing the land for $90/SF, and the Fundrise senior debt investment will feature a basis of $65/SF. Comparable land sales in Midtown average $96 psf; 2014 Midtown sales averaged $132 psf.
The loan is personally guaranteed by a high net worth individual with extensive real estate experience and sufficient liquidity.
14% current return with a fully pre-funded interest reserve is above market for a secured position.
Kim King completed the first Midtown condo project in this cycle (Ansley Green). It is a 6-unit wood-frame project 2 blocks north of the subject project. 5 of 6 units have sold and the project is three months from delivery. The sponsor has a deep understanding of the immediate market, excellent track record and local reputation.
The investment is projected to exit after construction plans are completed and a senior construction loan is secured. Fundrise was presented this deal because Kim King’s traditional bank was not able to close quickly enough. There is also a high probability that Kim King refinances the Fundrise acquisition loan with cheaper capital in 90 days after lockout.
|Gross Annual Return*||14.0%|
|Capital Senior to Fundrise||0%||0|
|Capital Junior to Fundrise||30-39%||2|
|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||38.7%||$569,192|
|Senior Debt||Fundrise Investment||61.3%||$900,000|
The site is 0.32 acres / 14,000 SF of vacant land. Upon completion of the pre-development period, it is anticipated the Fundrise’s investment will be repaid, and a 20 unit luxury condo building will be constructed.
|Address||238 14th Street|
|City & State||Atlanta, GA|
|Product Type||Residential / Multifamily|
|Project Phase||Acquisition / Pre-Development|
Atlanta is the largest city in the South and is considered the region’s main cultural and economic hub. The Atlanta MSA is the 8th largest in the nation, and net migration is expected to top 50,000 people by year end 2016.
Firms are attracted by the region’s educated work force and low labor costs, absence of unions, low cost but high quality of life, and climate. The city’s main industries are business/professional services, hospitality, and it is known as a key sales hub for west coast tech. Since the recession, the city has become home to State Farm (8,000 jobs), Mercedes Benz USA (1,000 jobs), NCR, Porsche, and Pulte Group.
While the region continues to draw firms and households due to its low cost, locals remain concerned about the city’s infrastructure, which has plagued the region since the inception of urban sprawl, and the lack of senior, high paying jobs. In addition, the quality of the education in the region remains spotty.
The subject property is located in Atlanta’s midtown neighborhood, and is bounded by I-85 to the west, Piedmont Park to the east, North Avenue to the south, and Peachtree St NE and 14th St NE to the north. Midtown is Atlanta’s second largest business district and is known as a walkable culture center that houses some of Georgia’s largest employers. Geographically, Midtown is in the center of Atlanta and just north of downtown, which is the city’s largest business district.
Demand drivers include corporate headquarters such as Coca-Cola, Equifax, Invesco, and Earthlink, while Wells Fargo, PriceWaterhouseCoopers, and AT&T have regional offices. Google also has a regional office in Midtown next to the Federal Reserve Bank of Atlanta, and is planning a second space at Jamestown Properties’ Ponce City Market. Of note, Google has chosen Atlanta as a market to install its high speed (1 gigabit per second) Google Fiber Internet service, citing the region as affordable with a high quality of life for entrepreneurs in the next 20 years.
Midtown is also known as Atlanta’s main cultural hub. Attractions include the Fox Theater, Atlanta Botanical Garden, the High Museum of Art, Atlanta Ballet, Atlanta Symphony Orchestra, and others. In addition, the neighborhood’s central location next to Piedmont Park make it a natural location for festivals, fairs, and outdoor events.
Notably, Midtown is highly walkable and accessible by MARTA, the city’s rail system, and by MARTA buses. The Gold Line light rail is a 28 minute ride from the Midtown Station to the Airport. The Midtown mile, one of Atlanta’s premiere retail corridors along Peachtree, features some of Atlanta’s most prominent high-rises, including 1010 Midtown and the Loews Hotel (which are condos that the subject property will compete with). This area is noted for the resurgence in street level retail that draws restaurant seekers and window shoppers. Midtown is home to the W Hotel, the Four Seasons, The Hyatt, and a number of mid-level flags.
Kim King Associates, LLC is an Atlanta based, full service real estate firm that creates value through commercial, residential and mixed-use development and through select acquisition and re-positioning of under performing assets.View full profile
|Gross ann. return*||14.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||13.5%|
|Gross Ann. Return*||15.0%|
|Term Remaining||0 mo.|
|Underlying Security||Preferred Equity|
|Gross Ann. Return*||11.0%|
|Term Remaining||0 mo.|
|Underlying Security||Senior Debt|