Tribeca NYC - GP Loan

Min. Invest
$50,000
Target Hold
24 mo
Annualized Returns
12.00%
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Exterior 44 Hudsonwide.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 Debt
Term 24 Months
Raise Amount $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

Documentation


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.

Contact Sponsor

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Investor Tutorial

CERTAIN INFORMATION REGARDING THIS OFFERING

THESE UNITS ARE BEING OFFERED WITHOUT REGISTRATION UNDER ANY FEDERAL OR STATE SECURITIES LAWS, BUT ARE BEING OFFERED UNDER AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER COMPARABLE EXEMPTIONS UNDER VARIOUS STATE SECURITIES LAWS. HOWEVER, THE SECURITIES AND EXCHANGE COMMISSION (“COMMISSION”) HAS NOT DETERMINED THAT THESE UNITS ARE EXEMPT FROM REGISTRATION. THESE UNITS HAVE NOT BEEN REVIEWED, APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY, ADEQUACY, COMPLETENESS OR MERITS OF THIS MEMORANDUM, AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL TO, OR A SOLICITATION OF AN OFFER TO BUY FROM, NOR SHALL ANY OF THE UNITS BE OFFERED OR SOLD TO, ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER, SOLICITATION, PURCHASE, OR SALE IS UNLAWFUL OR UNAUTHORIZED UNDER THE SECURITIES LAWS OF SUCH JURISDICTION.

THE STATEMENTS MADE HEREIN ARE MADE AS OF THE DATE ON THE COVER OF THIS OFFERING MEMORANDUM. THIS OFFERING MEMORANDUM CONSTITUTES AN INVITATION TO THE PROSPECTIVE INVESTOR TO SUBMIT AN OFFER TO SUBSCRIBE. NO PERSON MAY PURCHASE THE UNITS OFFERED HEREBY EXCEPT PURSUANT TO AN EXECUTED SUBSCRIPTION AGREEMENT IN THE FORM PRESCRIBED BY THE FUND, AND THEN ONLY FROM A PERSON TO WHOM THE FUND OR ITS DESIGNATED AGENT HAS DELIVERED A COPY OF THIS OFFERING MEMORANDUM.

THESE UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY THE FUND. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THERE IS CURRENTLY NO PUBLIC MARKET FOR THESE UNITS.

IN MAKING A DECISION TO PURCHASE UNITS HEREUNDER, PROSPECTIVE INVESTORS MUST CONDUCT THEIR OWN INDEPENDENT INVESTIGATION OF THE FUND AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, AND ARE ENCOURAGED TO CONSULT WITH THEIR ADVISORS AS THEY WILL BE REQUIRED TO REPRESENT THAT THEY ARE ABLE TO BEAR THE ECONOMIC RISK OF THEIR INVESTMENT AND THAT THEY ARE FAMILLIAR WITH AND UNDERSTAND THE FUNDAMENTAL RISKS AND TERMS OF THIS OFFERING.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION WITH RESPECT TO THE OFFERING OF THE UNITS WHICH IS NOT CONTAINED OR REFERENCED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. POTENTIAL INVESTORS MAY, IF THEY SO DESIRE, MAKE INQUIRIES OF THE FUND WITH RESPECT TO THE FUND’S BUSINESS OR ANY OTHER MATTERS SET FORTH HEREIN, AND MAY OBTAIN ANY ADDITIONAL INFORMATION WHICH SUCH PERSON DEEMS TO BE NECESSARY IN ORDER TO VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM (TO THE EXTENT THAT THE FUND POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE).

August 12 2020

Confidential Offering Memorandum: Four Arrow Funding, Inc

PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO CONSTRUE ANY CONTENTS OF THIS OFFERING MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS, AS CONSTITUTING INVESTMENT, LEGAL OR TAX ADVICE; RATHER THEY SHOULD CONSULT THEIR OWN ADVISORS OR COUNSEL WITH THE CAPACITY TO ADVISE AND PROTECT THEIR INTEREST IN CONNECTION WITH ALL MATTERS CONCERNING THIS OFFERING MEMORANDUM.

THIS OFFERING MEMORANDUM DOES NOT KNOWINGLY CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT A MATERIAL FACT, AND ANY SUCH MISSTATEMENT OR OMISSION IS DONE WITHOUT THE KNOWLEDGE OF THE PREPARERS OF THIS DOCUMENT OR THE FUND. AS SUCH THE FUND BELIEVES THAT THIS OFFERING MEMORANDUM CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF ALL MATTERS, DOCUMENTS AND CIRCUMSTANCES MATERIAL TO THIS OFFERING. WHILE THE DATA AND STATEMENTS CONTAINED HEREIN ARE BASED UPON INFORMATION BELIEVED TO BE RELIABLE, NO WARRANTY CAN BE MADE AS TO THE ACCURACY OF SUCH INFORMATION OR THAT CIRCUMSTANCES HAVE NOT CHANGED SINCE THE DATE SUCH INFORMATION WAS SUPPLIED. THIS MEMORANDUM CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF DOCUMENTS RELATING TO THE BUSINESS OF THE FUND AND THE UNITS OFFERED HEREBY, AS WELL AS SUMMARIES OF VARIOUS PROVISIONS OF RELEVANT STATUTES AND REGULATIONS. SUCH SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE ORIGINAL DOCUMENTS, STATUTES AND REGULATIONS.