|Current Ann. Return||5.0%|
|Accrued Ann. Return||+
|Gross Ann. Return*|
|Current Ann. Return||5.0%|
|Accrued Ann. Return||+ 5.0%|
|Gross Ann. Return*||10.0%|
|Term Remaining||10 of 24 mo.|
|Underlying Security||Preferred Equity|
This Whole Foods-anchored shopping center is a national showcase. The City of Chicago, Whole Foods, and the developer have come together to build a project that is arguably a first in the nation — designed and built with a mission to transform a neighborhood historically in decline. Personally spearheaded by both Mayor Rahm Emanuel and Whole Foods Co-CEO Walter Robb, the retail development intends to address a debate head on: Can Whole Foods catalyze a neighborhood turnaround?
The Fundrise team has worked for over two years to bring this offering to you.
We are believers in the investment because:
The Property: Englewood Square is a Whole Foods-anchored retail development that is leading a new wave of investment in this community on the near south side of Chicago. The 5.5-acre development site will include approximately 43,000 SF of retail, including a new 18,000 SF Whole Foods Market, 22,000 SF in-line retail building, and a 3,000 SF two-tenant building. The real estate developer, DL3 Realty, anticipates that the shopping center will generate an NOI of over $640,000 by the end of the 7-year term.
The shopping center is currently over 75% leased. Average rents for the retail building are $19 PSF, and the remaining to be leased space provides an opportunity for additional tenants once the Shopping Center is under construction.
Milestones & Exit Strategy: The sponsor closed on the land purchase from the city in September 2015, and anticipates the following development timeline:
Neighborhood: The Englewood neighborhood is located 8 miles south of downtown Chicago. Before 1960, Englewood was one of Chicago’s most vibrant communities with approximately 100,000 residents. Today, the population has declined to 30,000 residents, and the area is characterized as low income with high crime rates. Most large, national retailers have left the Englewood neighborhood, leaving the heart of the commercial corridor partially vacant. While the concept has proven successful in Detroit, the lower price-point Whole Foods format in a challenged neighborhood presents a key risk in the transaction.
Investment is beginning to return to the neighborhood. The City of Chicago invested over $250 million in a new, state of the art facility for Kennedy-King college, located directly across from the Englewood Square site on the east side of Halsted. Kennedy-King boasts a comprehensive culinary training facility and restaurant test kitchen, and is expected to partner with the Whole Foods to bring innovate ideas, job training, and local cuisine to the neighborhood. The Englewood Square site is also conveniently located a couple blocks from the newly renovated CTA Red Line stop, which connects the south side of Chicago with downtown, and directly across the street from the CTA Green Line stop.
Financials: The Project will cost $13.98M to construct, which includes $7.66M of subsidies (as described below) for a net of $6.7M. The real estate sponsor anticipates an exit NOI of $643,393 and a blended exit cap rate of 8.0%, yielding a sale price of $8.04M. This is further supported by an as-stabilized third party appraised value of $11.3M.
The project is made economically viable by the following elements of the capital stack:
As these structures do not require cash repayment, the total takeout payment for the senior debt (amortized balance plus exit fee) and Fundrise is calculated as $4,383,346, 31.3% LTC on total cost, and 54.5% LTV on the sponsor-projected valuation of $8.04M.
Payments: Interest payments on this series of notes will be as follows:
The interest payments on the notes will be tied to the distribution schedule under the terms of the preferred equity investment made by Fundrise, as follows:
The property is anchored by Whole Foods Market, a Fortune 500 organic and fresh food grocer with over 400 stores globally and $14 Billion in revenue in 2014. This will be the only Whole Foods in Chicago south of 51st Street, providing a regional draw due to the lack of grocery store supply within the surrounding area.
The economics of the shopping center are further bolstered by a $7.66 million of public subsidies and New Market Tax Credits.
The Partnership acquired the underlying land from the City of Chicago for $1 in mid-September. The City transferred the property with site work finished, pads ready for vertical construction. The pad-ready land with improvements is worth approximately $3.1 million.
|Gross Annual Return*||10.0%|
|Capital Senior to Fundrise||1-49%||1|
|Capital Junior to Fundrise||40% or more||1|
|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|
|Tenant Improvements||Whole Foods||25.0%||$3,500,000|
|Tax Credit||New Market Tax Credit Equity||29.7%||$4,159,950|
|Equity||Sponsor and LPs||9.5%||$1,323,088|
|Preferred Equity||Fundrise Investment||3.6%||$500,000|
This retail development in Chicago’s Englewood neighborhood sits at the intersection of 63rd and Halsted Streets. The development is planned to include a new 18,000 SF Whole Foods Market, 22,000 SF of complementary retail, and a 3,000 SF outlot parcel. The Whole Foods Market is expected to provide convenient access to fresh, healthy natural and organic food for residents of Englewood and surrounding neighborhoods. DL3 expects that Whole Foods Market will follow a urban small format model emphasizing conventional affordable produce along with organic options. Whole Foods has indicated the store will focus on the “365” house brand and prepared foods. There are three other Whole Foods Markets using this model located in Detroit, Newark, and New Orleans. Located directly across from the property, the recently constructed Kennedy- King Community College boasts an expansive culinary training facility and a multi-million dollar restaurant test kitchen that is expected to partner with the future Whole Foods to bring innovative ideas, job training, and local cuisine to the neighborhood.
The retail site plan was approved by the City of Chicago in November of 2013. Site work and environmental remediation for the Whole Foods Market and in-line retail building have been completed by the City of Chicago prior to the Partnership acquiring the land. Vertical construction on Englewood Square is projected to begin September 2015, and the Whole Foods grand opening is targeted for the fall of 2016. The shopping center is currently 75% pre-leased.
|Address||63rd and Halsted St.|
|City & State||Chicago, IL|
|Product Type||Retail / Grocery & Retail|
|Project Phase||Ground-Up / Leasing|
The Englewood neighborhood is located 8 miles south of downtown Chicago. In the early to mid twentieth century, the 63rd and Halsted commercial corridor was the second busiest shopping district in Chicago, only outpaced by the downtown Loop shopping area. The corner was home to a Sears department store, a Kresge's department store, and numerous smaller retailers. Englewood was a vibrant community with approximately 100,000 residents.
Today, the population has declined to 30,000 residents. Most large, national retailers have left the Englewood neighborhood, leaving the heart of the commercial corridor partially vacant. Investment is beginning to return to the neighborhood. The City of Chicago invested over $250 million in a new, state of the art facility for Kennedy-King college, located directly across from the Englewood Square site on the east side Halsted. Kennedy-King boasts a comprehensive culinary training facility and restaurant test kitchen, and is expected to partner with the Whole Foods to bring innovate ideas, job training, and local cuisine to the neighborhood. This 5-acre project is also intended to help anchor future development on the 13-acre Halsted Parkways master land development. The City of Chicago is considering additional development proposals for the balance of Halsted Parkways, including senior housing, education, farmer's market, and new sports facilities. Continued public investment, new private developments, and proximity to downtown and the University of Chicago have led to a growth pattern that hopes to challenge current notions and firmly plant Englewood on the list of Chicago’s hottest new neighborhoods.
The site is approximately half a mile from the newly renovated CTA Red Line stop and directly across the street from the CTA Green Line stop, connecting the south side of Chicago with downtown in less than a 20 minute ride. In addition, 63rd and Halsted streets are both major traffic thoroughfares, so the site benefits from high pedestrian and auto traffic. A recent study in 2012 showed an average of 15,756 vehicles per day traveled immediately adjacent to the project site.
DL3 Realty is a commercial real estate company driven by a mission to develop projects which help to improve and sustain neighborhood life in Chicago’s urban communities, including grocery retail centers, medical office buildings and educational facilities. Leon Walker, Managing Partner of DL3 Realty, has spent the past 10 years acquiring, developing and advising partners in the development of prominent commercial urban locations in Chicago in order to establish high quality education programs, professional office buildings, and national retailer anchored strip malls.View full profile
|Gross ann. return*||10.0%|
|Servicing and administration fee||-0.5%|
|Net ann. return to investors||9.5%|