Tribeca NYC - GP Loan

Min. Invest $50,000
Target Hold 24 mo
Annualized Returns 12%
Exterior 44 Hudsonwide.jpg
View 44 Hudson3.jpg
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Executive Summary

Overview

Chesterfield Faring, Ltd. (“CFL”) is syndicating a $1.0 million GP Loan (“GP Loan”). The GP Loan is secured by the $3.6
million equity interest (“GP Equity”) held by the general partner known as Prime Manhattan Development LLC (the “Sponsor”) in the property known as 44 Hudson St, New York, NY 10013 (the “Property”). The GP Loan is full recourse for principal and interest by the principals of the Sponsor. The principals have a net worth in excess of $40.00 million.


The Investment

CFL is offering (you) participants (the “Participants”) the right to co-invest in
the GP Loan in ten (10) one hundred thousand dollar ($100,000) units (the “Unit(s)”). Half Units for $50,000 are available. Each Unit provides a twelve percent (12.0%) annual return plus a two percent (2.0%) equity profit participation (“GP Profits”) in the GP Equity. It is anticipated that the value of the GP Profits per Unit range from $15,000 to $20,000 after Year 1 increasing the yield substantially to the Participants. For clarity, there is an $11.5 million first mortgage outstanding, a $1.5 million preferred equity investment (“PE”) made and invested by CFL (and its investors) in November 2019, and now this GP Loan for $1.0 million for a total of $14.0 million of senior financings secured by the Property. The Property is valued at $17.6 million currently for net equity of $3.6 million. Upon lease-up, the Property should be worth $19.1 million.


The Property

The Property is a 5-story commercial classic loft building with the elevator
opening directly into the center of each floor. Located in the heart of Tribeca, tenants are naturally attracted to this fully gentrified neighborhood; especially tech companies and other boutique firms. Built in 1890/1903, the Property contains 10,015 gross SF above grade plus a 2,003 SF basement. The PE is building out a model unit on the third floor, common area upgrades, and pay other expenses. Floors 3-5 have been gutted. The plan is to rent to a single retail tenant on the first floor and basement, plus lease the 2nd through 5th floors to office tenants. It’s possible the entire building could be leased to a single tenant.

Ascertaining Value

The Sponsor acquired the Property on Oct. 9, 2018 for $14.0 million or a total of $16.05 million including all acquisition costs. For valuation purposes, the Sponsor provided a breakout of the net rentable for each floor utilized for the proposed rent roll on page 5. The leasing broker believes the upper floors will generate $80+/- PSF rents based on 3,000 RSF floor plates, and $150 PSF rent for 2,100 SF first floor (plus the 1,500 RSF basement). The projected Year 1 annual net operating income at full occupancy (assuming a 5.0% general vacancy) is $906,378. At a 4.75% cap rate, the value is approximately $19.1 million or$1,905 PSF (based on gross SF) for a fully renovated building with new tenants. This is supported by comparable sales (see page 7). To lease up the Property, the Sponsor is projecting tenant improvement costs of $70.0 PSF, 30% of first year base rent (assuming 5 year leases) for broker commissions (assumes co-broke), plus carrying costs, which totals approximately $1.5 million. Therefore, an “as is” current value of approximately $17.6 million can be supported. There are air rights that could be used to add to the top floor, but have not been considered in this valuation. The air rights may be utilized in the future if the Property is ever converted to residential use.


Market

There are very few boutique modern loft office buildings in Tribeca, especially with floor plates less than 3,000 SF, which is highly desirable to small businesses for this location. Tribeca is one of the most sought-after residential neighborhoods in Manhattan, and one of the most affluent in the U.S. The Property is located facing Duane Park, a historic center in the heart of Tribeca with high pedestrian traffic, great visibility, and a highly desirable neighborhood to live and work. Subway access is centrally located to the
Property within two to three blocks away for the 4, 5, 6, NR, and the A, C, & E trains, with main stops in Tribeca at Canal/Church Street, Franklin Street, and at Canal/Broadway. Rents in Tribeca range from $70 PSF to $85 PSF for office space and $120 to $155 PSF for retail space, depending on the buildout, exposure, street traffic, sub market attractions, and exact
location.

Investment Type: Term: Raise Amount:
Debt
24 Months $1,000,000

The Investment

CFL is offering (you) participants (the “Participants”) the right to co-invest in the GP Loan in ten (10) one hundred thousand dollar ($100,000) units (the “Unit(s)”). Half Units for $50,000 are available. Each Unit provides a twelve percent (12.0%) annual return plus a two percent (2.0%) equity profit
participation (“GP Profits”) in the GP Equity. It is anticipated that the value of the GP Profits per Unit range from $15,000 to $20,000 after Year 1 increasing the yield substantially to the Participants. For clarity, there is an $11.5 million first mortgage outstanding, a $1.5 million preferred equity investment (“PE”) made and invested by CFL (and its investors) in November 2019, and now this GP Loan for $1.0 million for a total of $14.0 million of senior financings secured by the Property. The Property is valued at $17.6 million currently for net equity of $3.6 million. Upon lease-up, the Property should be worth $19.1 million.

Financial Sources

First Mortgage Loan $11,150,000
Preferred Equity $1,500,000
GP Loan $1,000,000
Total Sources $13,650,000

Financial Uses

Cost $16,050,000
Current Value $17,600,000
Stabilized Value $19,100,000

Market

There are very few boutique modern loft office buildings in Tribeca, especially with floor plates less than 3,000 SF, which ishighly desirable to small businesses for this location. Tribeca is one of the most sought-after residential neighborhoods in Manhattan, and one of the most affluent in the U.S. The Property is located facing Duane Park, a historic center in the heart of Tribeca with high pedestrian traffic, great visibility, and a highly desirable neighborhood to live and work. Subway access is centrally located to the Property within two to three blocks away for the 4, 5, 6, NR, and the A, C, & E trains, with main stops in Tribeca at Canal/Church Street, Franklin Street, and at Canal/Broadway. Rents in Tribeca range from $70 PSF to $85 PSF for office space and $120 to $155 PSF for retail space, depending on the buildout, exposure, street traffic, sub market attractions, and exact
location.

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